Working to learn

Drew Fudenberg; George Georgiadis; Luis Rayo

doi:10.1016/j.jet.2021.105347

Working to learn

Drew Fudenberg, George Georgiadis^*, Luis Rayo

^*Corresponding author for this work

Strategy

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

We study the joint determination of wages, effort, and training in “apprenticeships” where novices must work in order to learn. We introduce the idea of learning-by-doing as an inequality constraint, which allows masters to strategically slow training down. Every Pareto-efficient contract has an initial phase where the novice learns as fast as technologically feasible, followed by a phase where their master constrains how fast they learn. This latter phase mitigates the novice's commitment problem, and thus lets the novice consume more than they produce early on in the relationship. Our model has novel implications for optimal regulation.

Original language	English (US)
Article number	105347
Journal	Journal of Economic Theory
Volume	197
DOIs	https://doi.org/10.1016/j.jet.2021.105347
State	Published - Oct 2021

Funding

We thank Robert Akerlof, Daniel Barron, Gonzalo Cisternas, Michael Powell, Orie Shelef, and conference participants at CMID20 for helpful conversations, the National Science Foundation grant SES 1951056 for financial support, and Miguel Talamas for valuable research assistance.

Keywords

Apprenticeships
Contract Theory
Incentives
Learning by doing
Principal-agent

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.jet.2021.105347

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title = "Working to learn",

abstract = "We study the joint determination of wages, effort, and training in “apprenticeships” where novices must work in order to learn. We introduce the idea of learning-by-doing as an inequality constraint, which allows masters to strategically slow training down. Every Pareto-efficient contract has an initial phase where the novice learns as fast as technologically feasible, followed by a phase where their master constrains how fast they learn. This latter phase mitigates the novice's commitment problem, and thus lets the novice consume more than they produce early on in the relationship. Our model has novel implications for optimal regulation.",

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AU - Georgiadis, George

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AB - We study the joint determination of wages, effort, and training in “apprenticeships” where novices must work in order to learn. We introduce the idea of learning-by-doing as an inequality constraint, which allows masters to strategically slow training down. Every Pareto-efficient contract has an initial phase where the novice learns as fast as technologically feasible, followed by a phase where their master constrains how fast they learn. This latter phase mitigates the novice's commitment problem, and thus lets the novice consume more than they produce early on in the relationship. Our model has novel implications for optimal regulation.

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Working to learn

Abstract

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Keywords

ASJC Scopus subject areas

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