American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Innovation through Inventor Mobility: Evidence from Noncompete Agreements
American Economic Journal: Applied Economics
(pp. 406–38)
Abstract
Proponents of labor mobility restrictions argue that innovation incentives more than offset harm to workers. Yet the causal effect of such policies on innovation is an open empirical question. Leveraging plausibly exogenous state-level changes in the enforceability of noncompete agreements (NCAs), we find a significant negative effect on innovation. This effect is even larger for the most novel and innovative patents and firms. Further analysis shows these negative effects on innovation cannot be explained by entry alone and instead likely result from reduced knowledge flows. Our findings suggest that labor mobility plays a crucial role in spreading knowledge across firms.Citation
Reinmuth, Kate, and Emma Rockall. 2026. "Innovation through Inventor Mobility: Evidence from Noncompete Agreements." American Economic Journal: Applied Economics 18 (4): 406–38. DOI: 10.1257/app.20240804Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- J08 Labor Economics Policies
- J21 Labor Force and Employment, Size, and Structure
- K31 Labor Law
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes