Revisiting Labor Mobility in Innovation Markets

62 Pages Posted: 6 Apr 2016 Last revised: 29 Jul 2016

See all articles by Jonathan Barnett

Jonathan Barnett

USC Gould School of Law

Ted M. Sichelman

University of San Diego School of Law

Date Written: May 26, 2016


It is now widely asserted that legal regimes that enforce contractual and other limitations on labor mobility deter technological innovation. First, recent empirical studies purport to show relationships between bans on enforcing noncompete agreements, increased employee movement, and increased innovation. We find that these studies misconstrue legal differences across states and otherwise are flawed, incomplete, or limited in applicability. Second, scholars have largely adopted the view that California’s policy against noncompetes promoted Silicon Valley as the world’s leading technology center. By contrast, Massachusetts’ enforcement of noncompetes purportedly stunted innovation in the Route 128 region near Boston. We show that this account is incomplete. During the rise of Silicon Valley, California noncompete law did not as vigorously preclude noncompetes as today and firms could substantially mimic noncompetes through contractual and other instruments. Rather, fundamental technological and economic factors more persuasively account for the rise of Silicon Valley and the Boston area has remained a significant innovation center. There is little compelling ground for the view that barring noncompetes and other limitations on employee mobility promotes innovation.

Keywords: noncompetes; covenants not to compete; non-competition agreements; innovation; labor mobility; Silicon Valley; Route 128; regional economics

JEL Classification: J2, J6, K2, K3, L26, L5, M5, O3, O32, R1

Suggested Citation

Barnett, Jonathan and Sichelman, Ted M., Revisiting Labor Mobility in Innovation Markets (May 26, 2016). USC CLASS Research Paper No. 16-13, USC Law Legal Studies Paper No. 16-15, Available at SSRN: or

Jonathan Barnett

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
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Ted M. Sichelman (Contact Author)

University of San Diego School of Law ( email )

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San Diego, CA 92110-2492
United States
(619) 260-7512 (Phone)
(619) 260-2748 (Fax)

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