Labor Mobility of Scientists, Technological Diffusion, and the Firm's Patenting Decision
Volume: Volume 36, No. 2
Issue: Summer 2005
Pages: 298-317
Authors: Jinyoung Kim and Gerald Marschke
Title: Labor Mobility of Scientists, Technological Diffusion, and the Firm's Patenting Decision
Abstract: We develop and test a model of the patenting and R&D decisions of an innovating firm whose scientist-employees sometimes quit to join or start a rival. In our model, the innovating firm patents to protect itself from its employees. We show theoretically that the risk of a scientist's departure reduces the firm's R&D expenditures and raises its propensity to patent an innovation. We find evidence from firm-level panel data that is consistent with this latter result. Our results suggest that scientists' turnover is associated with cross-industry patenting variation and with recent economy-wide increases in patenting. Scientists' turnover may also partly account for why small firms have high patent-R&D ratios.