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

  • Prat, Julien



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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2780.

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Length: 40 pages
Date of creation: May 2007
Date of revision:
Publication status: published in: Journal of Applied Econometrics, 2010, 25 (6), 929-962
Handle: RePEc:iza:izadps:dp2780
Contact details of provider: Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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  5. Shintaro Yamaguchi, 2006. "Job Search, Bargaining, and Wage Dynamics," 2006 Meeting Papers 54, Society for Economic Dynamics.
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  7. Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-98, December.
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