Innovation Motivation: Behavioral Effects of Post-Employment Restrictions

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 20.03.2012, 12:15 - 13:30


Presentation by 

Orly Lobel (University of San Diego)


Traditional economic models view post-employment restrictions as necessary constraints stemming from the assumption that absent such contractual protections, employers would under-invest in R&D and employee training. This article enriches the analysis of human capital investment by exploring effects on employee motivation while keeping in mind the aggregate dimension of mobility over time. The article reports original experimental research demonstrating that contractual background affects motivation and performance: in a pure effort task, individuals abandoned the task at higher rates, spent less time on it, and failed more frequently to find the correct solution when bound by post-employment restrictions. At the same time, some of these effects, including time on task and quality of performance, largely disappeared in a task that invoked internal talent and creativity. The article links recent empirical evidence about positive spillovers with a behavioral analysis that suggests further positive effects, together offering a richer perspective of the costs and benefits of post-employment restrictions.

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