Reference

Jessica Jeffers (The University of Chicago Booth School of Business), The Impact of Restricting Labor Mobility onCorporate Investment and Entrepreneurship, Fédération des Banques Françaises Seminar, TSE, November 13, 2017, 12:30–14:00, room MF 323.

Abstract

I investigate the impact of restricting labor mobility on two components of growth: en-trepreneurship and capital investment. To identify the mechanism, I combine LinkedIn’sdatabase of employment histories with staggered changes in the enforceability of non-competeagreements that come mostly from state supreme court rulings. Stronger enforceability leadsto a substantial decline in employee departures, especially in knowledge-intensive occupations,and reduces entrepreneurship in corresponding sectors. However, these shocks increase the in-vestment rate at existing knowledge-intensive firms. The estimates in my sample suggest that,in such sectors, there is roughly $1.5 million of additional capital investment from publicly-heldfirms for every lost new firm entry.

Research partnership

Fédération des Banques Françaises Research Initiative (sustainable)