The Effect of Job Security on Inventor Behavior

This paper investigates the effect of job security on inventor behavior. We hypothesize that higher job security of employee inventors leads them to exploit more intensively firm-specific technologies and thus to produce less novel innovations. We use employer-employee data derived from patent records to address this research question. In particular, we analyze the effects of the progressive implementation of Wrongful Discharge Laws, which introduced limitations to the employers' ability to fire employees, in U.S. states from the 1970s to the 1990s. The results of the Differences-in-Differences analysis support our predictions.