Leisure versus learning-by-doing — saturation effects and utility-side limits to endogenous growth

Abstract

A simple model with learning as a by-product of working based on an experience curve is presented: Accumulation of human capital is measured by means of output aggregated over time. Compared to the prevailing modelling technique of ‘learning-by-investment’, separating learning from real capital accumulation leads to an independent control of learning-by-doing via working time. Dynamic optimisation of the choice between working (resulting in learning and consumption) and leisure is performed. Depending on the production elasticity of experience and on the intratemporal elasticity of substitution between consumption and leisure at each moment, a situation with or without endogenous growth results.