Paper # Author Title
This paper suggests that skill accumulation through past work experience, or "learning-by-doing", can provide an important propagation mechanism for initial shocks, as the current labor supply affects future productivity. Our econometric analysis uses a Bayesian approach to combine micro-level panel data with aggregate time series. Formal model evaluation shows that the introduction of the LBD mechanism improves the model's ability to fit the dynamics of aggregate output and hours. Download Paper
To generate persistence we augment the standard real business cycle (RBC) model with a "learning by doing" (LBD) mechanism, where current labor supply affects workers' future labor productivity. Our econometric analysis shows that the LBD model fits aggregate data much better than the standard RBC model. We calculate posterior odds for the structural models and formally show that the LBD model more closely mimics the autocorrelation and impulse response patterns that we found in a bivariate VAR analysis. Download Paper