Innovative firms need to hire and motivate highly talented workers. This article connects the potential returns to innovation to the structure of compensation for skilled employees. We show that the software firms that operate in software sectors with high potential upside gains to innovation...

Young individuals, taking the locational choices made by their altruistic parents as given, decide whether or not to acquire skills. The use of location-specific word-of-mouth communication in the transmission of information about (skilled) job opportunities implies that the local social...