Entrepreneurial Spillovers from Corporate R&D

This paper offers the first study of how changes in corporate R&D investment affect labor mobility. We document that increases in firm R&D have no measurable effect on employee mobility to other incumbent firms or on exit from employment, but do spur employee departures to join the founding teams of startups. These startups are more likely to be outside the R&D-investing employer's industry, suggesting that the ideas moving via employees to startups would impose diversification costs on the parent. These startups also likely generate substantial spillover benefits, as they are more likely to be VC-backed, high-tech, and high-wage.