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Download the Paper (239 K, PDF file) - April 27, 2005 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
In medicine, law, consulting, and many other careers, a significant proportion of human capital is created through profession-specific learning-by-doing (LBD. In the absence of long-term wage contracts, if LDB effects are sufficiently large, then young workers should face a negative wage in return for high future wages. However, if workers are liquidity constrained, then young workers compete away those returns to experience by working inefficiently hard. This inefficiency results in higher lifetime earning, causes older workers to exert too little effort, and tends to lower the observable (monetary) returns to experience. Unlike traditional models, this can explain "career concerns" in professions where effort and ability are observable.

SUGGESTED CITATION:
Marko Tervio, "Overworked and Overpaid: The Costs of Learning by Doing" (April 27, 2005). Institute for Research on Labor and Employment. Institute for Research on Labor and Employment Working Paper Series. Paper iirwps-119-05.
http://repositories.cdlib.org/iir/iirwps/iirwps-119-05