Is Inter-firm Labor Mobility a Channel of Knowledge Spillovers? Evidence from a Linked Employer-Employee Panel

An employer-employee panel is used to study whether the movement of workers across firms is a channel of unintended diffusion of R&D-generated knowledge. Somewhat surprisingly, hiring workers from others R&D labs to ones own does not seem to be a significant spillover channel. Hiring workers previously in R&D to ones non-R&D activities, however, boosts both productivity and profitability. This is interpreted as evidence that these workers transmit knowledge that can be readily copied and implemented without much additional R&D effort.