Learning by Doing and Spillovers: Evidence
from Firm-Level Panel Data
SALVADOR BARRIOS and ERIC STROBL
catholique de Louvain, Voie du Roman Pays 34, B-1348 Louvain-La-Neuve,
Abstract. In this paper we extend the Bahk and Gort (1993) (Journal of Political Economy,
101, 561–583) approach of testing for the impact of learning by doing (LBD) on ﬁrm pro-
ductivity using data on a panel of Spanish manufacturing ﬁrms. Speciﬁcally, we show that
support for ﬁrm speciﬁc LBD and spillovers from sector-wide LBD seems to hinge crucially on
the econometric methodology, and hence the underlying assumptions, employed. Once po-
tential biases due to unobserved time invariant ﬁrm speciﬁc eﬀects and endogeneity are taken
account of, there is only support for spillovers from sector-wide LBD. Moreover, results
depend on the deﬁnition of LBD employed.
Key words: Learning by doing, panel data estimation techniques, Spanish manufacturing,
JEL Classiﬁcations: 030, L60.
Economists have long taken an interest in the ability of ﬁrms to learn by
experience, a process commonly referred to as learning by doing (LBD), as it
is often viewed as a major source of technical change and productivity
growth. Accordingly, as ﬁrms age, they are likely to improve their productive
eﬃciency over time by ‘‘learning’’ from their experience of operating in the
market. Understanding how this process takes place not only allows one to
understand how productivities of ﬁrms change and industries evolve over
time, but may also provide a key for explaining why even within narrowly
deﬁned industries ﬁrms’ productivities appear to diﬀer so widely.
Although attempts at empirically quantifying the importance of LBD for
ﬁrms’ productive eﬃciency can be traced back to the early part of the last
century, ttpgotohe actual logistics of it are, however, still very much under
scrutiny and unresolved. The earlier empirical studies on LBD took a rather
Author for correspondence: E-mail: email@example.com
Review of Industrial Organization 25: 175–203, 2004.
Ó 2004 Kluwer Academic Publishers. Printed in the Netherlands.