Whereas a number of studies have considered the implications of employee mobility, comparatively little research has considered institutional factors governing the ability of employees to move from one firm to another. This paper explores a legal constraint on mobility--employee non-compete agreements--by exploiting Michigan's apparently inadvertent 1985 reversal of its non-compete enforcement policy as a natural experiment. Using a differences-in-differences approach, and controlling for changes in the auto industry central to Michigan's economy, we find that the enforcement of non-competes indeed attenuates mobility. Moreover, non-compete enforcement decreases mobility more sharply for inventors with firm-specific skills and for those who specialize in narrow technical fields. The results speak to the literature on employee mobility while offering a credibly exogenous source of variation that can extend previous research on the implications of such mobility.labor, statistics, design of experiments, organizational studies, personnel, strategy, research and development, innovation

Geographic localization of knowledge spillovers is a central tenet in multiple streams of research.However, prior work has typically examined this phenomenon considering only one geographic unitcountry, state or metropolitan area -at a time, and has also rarely accounted for spatial distance. We disentangle these multiple effects by using a regression framework employing choice-based sampling to estimate the likelihood of citation between random patents. We find both country and state borders to have independent effects on knowledge diffusion beyond what just geographic proximity in the form of metropolitan collocation or shorter within-region distances can explain. An identification methodology comparing inventor-added and examiner-added citation patterns points to an even stronger role of political borders. The puzzling state border effect remains robust on average across analyses, though is found to have waned with time. The country effect has, in contrast, not only remained robust but even strengthened over time.

JEL classification: O30 O38 R10 R12 Keywords:Non-compete agreements Labor mobility Regional economics a b s t r a c t A growing body of research has documented the local impact of employee non-compete agreements, but their effect on interstate migration patterns remains unexplored. Exploiting an inadvertent policy reversal in Michigan as a natural experiment, we show that non-compete agreements are responsible for a "brain drain" of knowledge workers out of states that enforce such contracts to states where they are not enforceable. Importantly, this effect is felt most strongly on the margin of workers who are more collaborative and whose work is more impactful.

Although much has been written about psychological and social-psychological influences on creativity, 2 only recently have sociological approaches

Nearly a third of U.S. patents rely directly on federal research