Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster

30 Pages Posted: 15 Apr 2005

See all articles by Bruce Fallick

Bruce Fallick

Federal Reserve Bank of Cleveland

Charles A. Fleischman

Board of Governors of the Federal Reserve System

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 2005

Abstract

In Silicon Valley's computer cluster, skilled employees are reported to move rapidly between competing firms. If true, this job-hopping facilitates the reallocation of resources towards firms with superior innovations, but it also creates human capital externalities that reduce incentives to invest in new knowledge. Outside of California, employers can use non-compete agreements to reduce mobility costs, but these agreements are unenforceable under California law. Until now, the claim of hyper-mobility of workers in Silicon has not been rigorously investigated. Using new data on labor mobility we find higher rates of job-hopping for college-educated men in Silicon Valley's computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley's, suggesting some role for state laws restricting non-compete agreements. Outside of the computer industry, California's mobility rates are no higher than elsewhere.

Keywords: Silicon Valley, industrial cluster, mobility, non-compete, modularity, innovation

JEL Classification: R12, L63, O3, J63, J48

Suggested Citation

Fallick, Bruce and Fleischman, Charles A. and Rebitzer, James B., Job-Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster (October 2005). FEDS Working Paper No. 2005-11, IZA Discussion Paper No. 1799, Available at SSRN: https://ssrn.com/abstract=688446 or http://dx.doi.org/10.2139/ssrn.688446

Bruce Fallick (Contact Author)

Federal Reserve Bank of Cleveland ( email )

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Charles A. Fleischman

Board of Governors of the Federal Reserve System ( email )

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James B. Rebitzer

Boston University School of Management ( email )

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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