Learning by Doing: Evidence from Bankruptcy Judges
56 Pages Posted: 8 Dec 2017 Last revised: 13 Aug 2019
Date Written: March 12, 2018
Exploiting the within-district random assignment of large corporate Chapter 11 filings, we estimate the costs of inexperience for bankruptcy judges. Inexperienced judges rule slower on motions and their cases spend more time in bankruptcy. The learning curve is approximately four years, but exposure to more corporate cases and a greater diversity of businesses accelerates judges' learning. Firms assigned to experienced judges are more likely to reorganize but not more likely to refile for bankruptcy, and their creditors have higher recovery rates. The empirical findings are robust to controlling for judge fixed characteristics and general skills. Our evidence has implications for on-the-job training for workers involved with complex tasks.
Keywords: bankruptcy judges, human capital, learning by doing, job-specific skills
JEL Classification: G33, G34, J24
Suggested Citation: Suggested Citation