Taxation under Learning by Doing

Taxation under Learning-by-Doing∗

We study optimal labor-income taxation in a dynamic economy in which the agents’ productivity is their own private information, is stochastic, and evolves endogenously over the lifecycle due to learning-by-doing. First, we identify novel distortions that originate in the endogeneity of the agents’ private information and that contribute to higher labor wedges under the optimal tax code. Next, w...

Monopolistic Screening under Learning By Doing

This article investigates the design of incentives in a dynamic adverse selection framework where agents' production technologies display learning effects and agents' learning rates are private knowledge. In a simple two-period model with full commitment available to the principal, we show that whether learning effects are overor underexploited crucially depends on whether more efficient agents...

Adjustment Costs, Learning-by-Doing, and Technology Adoption under Uncertainty

We consider a variety of vintage capital models of a firm’s choice of technology under uncertainty in the presence of adjustment costs and technology-specific learning. Similar models have been studied in a deterministic setting. Part of our objective is to examine the robustness of the implications of the certainty models to uncertainty. We find that the answer crucially depends on the specifi...

Collusive Market Structure Under Learning-By-Doing and Increasing Returns

Learning by doing.

You have roughly 40 contact hours in a typical course. If all you do in them is lecture, you might as well just hand out your notes and let the students find something more productive to do with all that time. The only way a skill is developed—skiing, cooking, writing, critical thinking, or solving thermodynamics problems—is practice: trying something, seeing how well or poorly it works, reflec...