Consequences of Lab Closures: Understanding Worker Mobility and Technological Trajectory

Abstract

What are the consequences of R&D lab closures for inventor employer and geographical mobility, and for inventor productivity? This paper investigates this question in the context of the pharmaceutical industry, after firms decide to no longer have an R&D presence in a region and thus close their lab there. After analyzing a hand-collected sample of displaced inventors in the US in the last twenty years and examining employer and geographical mobility outcomes, I find that inventors that were more productive pre-closure are more likely to change both firm and region, as well as more likely to remain in the same technological trajectory. I also find that inventors that change labs within the same firm are the worst performers ex-post.