Chapter 10. Learning by Doing

This chapter reviews the theoretical and empirical literature on learning by doing. Many of the distinctive theoretical implications of learning by doing have been derived under the assumption that the cost–quantity relationships observed in numerous empirical studies are largely the result of passive learning and some further require that passive learning is unbounded. The empirical literature raises doubts about both assumptions. When observed cost–quantity relationships indicate sustained productivity growth, factors other than passive learning are generally at work. When passive learning is the dominant factor, productivity growth is invariably bounded. Thus, empirically relevant theories incorporating learning by doing are hybrid models in which passive learning coexists with other sources of growth. But in such models, many of the distinctive implications of passive learning become unimportant. Moreover, passive learning is often an inessential component of long-run growth; to the contrary, too much learning can lead to stagnation.