Labor mobility is often considered to be an important source of knowledge externalities, making it difficult for firms to appropriate returns to R&D investments. In this paper, I argue that inter-firm transfers of knowledge embodied in people should be analyzed within a human capital framework. Testing such a framework using a matched employer-employee data set, I find that the technical staff in R&D-intensive firms pays for the knowledge they accumulate on the job through lower wages in the beginning of their career. Later they earn a return on these implicit investments through higher wages. This suggests that the potential externalities associated with labor mobility, at least to some extent, are internalized in the labor market.
We analyze short and long‐term effects of worker displacement. Our sample consists of male workers displaced from Norwegian manufacturing plants. We find that displacement increases the probability of leaving the labor force by 31%. The drop‐out rate from the labor force is particularly high in the first years following displacement. The average earnings effects for those who remain in the labor force are moderate, a 3% loss relative to non‐displaced workers after seven years. Splitting displaced workers on within‐ and between‐firm movers, we find that the estimated earnings loss is entirely driven by between‐firm movers who experience a 3.6% loss. Transfers to other plants within multi‐plant firms upon displacement are quite common. Our results support the view that human capital is partly firm specific and partly industry specific. We find no evidence suggesting that human capital is plant specific.
We study the migration behavior of displaced workers and find that job displacement increases regional mobility. We find, however, that non-economic factors such as family ties are very important for the migration decision, and that there is strong heterogeneity in outcomes. We find large income losses for workers who move to regions where they have family or to rural areas, while e.g. rural to urban movers realize a significant long-term increase in earnings. We also find that life events related to fertility, divorce and new relationships correlate with mobility after job loss and may partly explain the large income losses.
Acknowledgements:We thank Sandy Black, Paul Oyer, Matti Sarvimäki, Steve Trejo and seminar participants at the
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