The Rate of Learning-By-Doing: Estimates from a Search-Matching Model

40 Pages Posted: 17 May 2007

See all articles by Julien Prat

Julien Prat

University of Vienna; IZA Institute of Labor Economics

Date Written: May 2007

Abstract

We construct and estimate by maximum likelihood an equilibrium search model where wages are set by Nash bargaining and idiosyncratic productivity follows a geometric Brownian motion. The proposed framework enables us to endogenize job destruction and to estimate the rate of learning-by-doing. Although the range of the observations is not independent of the parameters, we establish that the estimators satisfy asymptotic normality. The structural model is estimated using Current Population Survey data on accepted wages and employment durations. We show that it captures almost perfectly the joint distribution of wages and job spells. We find that the rate of learning-by-doing has an important positive effect on aggregate output and a small impact on employment.

Keywords: job search, human capital, uncertainty, structural estimation

JEL Classification: J31, J64

Suggested Citation

Prat, Julien, The Rate of Learning-By-Doing: Estimates from a Search-Matching Model (May 2007). IZA Discussion Paper No. 2780, Available at SSRN: https://ssrn.com/abstract=986358 or http://dx.doi.org/10.2139/ssrn.986358

Julien Prat (Contact Author)

University of Vienna ( email )

Bruenner Strasse 72
Vienna 1210, Vienna
Austria

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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