Job Hopping, Information Technology Spillovers, and Productivity Growth

Abstract

T he movement of information technology (IT) workers among firms is believed to be an important mechanism by which IT-related innovations diffuse throughout the economy. We use a newly developed source of employee microdata-an online resume database-to model IT workers' mobility patterns. We find that firms derive significant productivity benefits from the IT investments of other firms from which they hire IT labor. Our estimates indicate that over the last two decades, productivity spillovers from the IT investments of other firms transmitted through this channel have contributed 20%-30% as much to productivity growth as firms' own IT investments. Moreover, we find that the productivity benefits of locating near other IT-intensive firms can primarily be explained by the mobility of technical workers within the region. Our results are unique to the flow of IT workers among firms, not other occupations, which rules out some alternative explanations related to the similarity of firms that participate in the same labor flow network.

Are All Spillovers Created Equal? A Network Perspective on IT Labor Movements

“…As IT workers migrate to different firms throughout their careers, their labor movements can generate knowledge spillovers that substantially benefit firms that employ them. Tambe et al (2013) discuss a number of sources of ITrelated spillovers created by employment mobility and document the economic significance of such spillovers. They show that the employment of IT professionals from other IT intensive firms is associated with an increase in performance on the order of 20-30% of the firm's own IT investment returns.…”

“…Currently, there exists little theoretical or empirical work on how networks formed through labor movements affect firm performance, and no work focusing specifically on IT employment networks. While the recent work by Tambe et al (2013) and Huang et al (2013) have documented the effect of direct spillovers from IT workforce. In this study, we strive to enhance the understanding on the causal mechanisms underlying these relationships discussed by existing literature, through offering insights on how network structure affects such spillovers.…”

“…The data set includes career information for both full-time and temporary employees which is especially important for IT workers who are often contractors, and these employees may be more mobile and contribute a larger proportion of knowledge flow among firms. This dataset has previously been described in detail in (Tambe et al 2013). …”

“…Technology innovation can generate productivity spillovers as technology use and know-how propagate from earlier adopters to later ones (Bartelsman et al 1994;David 1989;Dedrick et al 2003;Tambe et al 2013). Access to superior technology is a primary driver for firms' IT productivity, and spillovers from the mobility of IT workers can be an important part of technology acquisition, especially for process knowledge that is required to exploit the benefits of IT hardware and software (Tambe et al 2013).…”

“…Access to superior technology is a primary driver for firms' IT productivity, and spillovers from the mobility of IT workers can be an important part of technology acquisition, especially for process knowledge that is required to exploit the benefits of IT hardware and software (Tambe et al 2013). It has been observed that IT workers have high labor mobility, and IT practitioners have noted that one way these workers obtain career advancement is through acquiring skills at one employer which can be transferred to future employers (Dedrick et al 2003;Draca et al 2006).…”