Working Paper: NBER ID: w0871
Authors: Ariel Pakes; Shmuel Nitzan
Abstract: This paper considers the problem of hiring scientists for research and development projects when one takes explicit account of the fact that the scientist may be able to use the information acquired during the project in a rival enterprise. Management's problem is to determine an optimum labor policy for its project. The policy consists of an employment decision and a labor contract. Given optimum behavior, it is straightforward to analyze the effect of the potential for mobility of scientific personnel on project profitability and on research employment. We also formalize conditions under which one would expect to observe a scientist leaving his employer to set up (or join) a rival.
Keywords: Research Personnel; Labor Contracts; Project Profitability; Mobility of Scientists
JEL Codes: J24; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Optimal labor policies (J08) | Personnel mobility (J62) |
| Management decisions regarding labor contracts (J50) | Likelihood of personnel mobility (J62) |
| Likelihood of personnel mobility (J62) | Profitability of research projects (O22) |
| Terms of employment (J63) | Decision to remain with current employer or leave to set up a rival enterprise (L26) |
| Expected benefits of leaving < Expected payments from the firm (G19) | Decision to stay (J26) |
| Optimal labor contract (J41) | Maximize expected profits while minimizing personnel mobility risk (J62) |