Keywords: Silicon Valley, industrial cluster, mobility, non-compete, modularity, innovation.
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.
Full paper (245 KB PDF)
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Last update: March 2, 2005