Abstract

We show that substantial regional differences in returns to information technology (IT) investments by US firms are attributable in part to knowledge spillovers generated by the movements of IT workers among firms. We use a newly developed source of employee micro-data with employer identifiers and location information to model IT workers’ mobility patterns. Access to an external IT pool one standard deviation larger than the mean is associated with a 20% increase in the output elasticity of own IT investment. We discuss implications for managers and for policy makers.

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