Learning by doing and spillovers: Evidence from firm-level panel data

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 productivity 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 potential 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.