Chapter

Technological Progress and Learning

Pranab Bardhan and Christopher Udry

in Development Microeconomics

Published in print May 1999 | ISBN: 9780198773719
Published online November 2003 | e-ISBN: 9780191595929 | DOI: http://dx.doi.org/10.1093/0198773714.003.0012
 Technological Progress and Learning

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This chapter first presents a model of learning‐by‐doing and learning from others in which farmers learn about the optimal target input for a new technology by observing the input choice and yield on their own and on neighbouring farms. Because of this ‘social learning’, dynamic considerations become relevant to the technology adoption decision. It is shown how, in the presence of information spillovers, adoption by a farmer is part of a dynamic game in which the expected level of experimentation by neighbours matters. The next section presents a model of technological change where training is complementary to the new technique. The model illustrates how imperfections in the labour market result in an under‐investment in training, and how an economy may get trapped in a poor equilibrium in which insufficient training and insufficient adoption reinforce each other.

Keywords: dynamic games; experimentation; information spillovers; labour market; learning; social learning; technology adoption; training

Chapter.  7840 words. 

Subjects: Economic Development and Growth

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