Appropriated Growth

How do restrictions on labor mobility affect economic growth? We quantitatively answer this question with a dynamic agency model that jointly accounts for investment in intangible capital, knowledge spillovers, and the allocation of rents among investors and agents. Our calibration is disciplined by targeting the responses of employee turnover, firm intangible investment rates, and a novel construction of the values of workers' outside options to state-level changes in the degree of non-compete enforcement. Equilibrium analysis that studies counterfactual rates of knowledge appropriation finds potential gains to growth of 20 basis points per year from policies that enhance mobility and alleviate agency problems