Although early human capital theory recognized the relevance of workers' experience, its focus was on education and formal training. More recent studies show that much of the performance of newly hired workers is driven by learning by doing or learning from peers or supervisors in the workplace....

Although early human capital theory recognized the relevance of workers' experience, its focus was on education and formal training. Recent studies find that much of the performance of newly hired workers is driven by learning by doing or learning from peers or supervisors in the workplace....

We develop a general equilibrium overlapping generations model which is based on the view that education makes workers more productive by increasing their ability to learn from work experience, rather than providing skills that directly increase productivity. One important implication of the...