Regional Disadvantage? Non-Compete Agreements and Brain Drain

Abstract

We construct inventor career histories using the U.S. patent record from 1975 to 2005 and demonstrate a brain drain among patenting inventors from states that enforce employee non-compete agreements to those that do not. Non-compete enforcement appears to drive away inventors with greater human and social capital. We address causality-related concerns with a difference-in-differences study design based on an inadvertent reversal of Michigan's non-compete enforcement policy.