Productivity Unveiled

Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.

One oft-cited source of productivity is learning by doing, which is the ability of workers to raise productivity through experience. In fact, economists have credited the Horndal effect to learning by doing. The longer workers do the same type of job the better they get. The result is higher production without having to put in new machines or hire more workers.

Several studies have looked into the overall dynamics of the learning process – how fast productivity gains accrue, and whether knowledge acquired from experience can be forgotten over time and if it spills over to other areas of production. But partly because of lack of data, these studies reveal little about how learning occurs at a plant, making it seem as though productivity improvements from learning by doing arise spontaneously as production increases, without any scope for managers to affect outcomes.

To find out the specific mechanisms through which learning takes place, professors Chad Syverson, Steven D. Levitt and John A. List analyzed detailed production records from a major carmaker’s assembly plant. Beyond showing evidence of rapid learning by doing, their study, “Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant,” provides insights into how workers’ experiences at a plant can lead to greater productivity.

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