In this paper, we consider a model of on-the-job learning where workers learn
informally by watching and imitating colleagues. We estimate the rate of knowledge diffusion
inside the firm using three matched worker-firm data sets from Benin, Morocco and Senegal.
We rely on non-linear least squares to estimate the structural parameters of the informal
learning model and account for unobserved firm heterogeneity using firm factors derived
from a principal component analysis. We find that the rate of knowledge diffusion is around 7
percent in Morocco and Senegal and much higher in Benin, but part of the learning-by-
watching returns stems from firm heterogeneity. Informal training significantly affects the
shape of returns to tenure in African countries. Finally, we estimate an extended model with
both learning-by-watching and learning-by-doing and find significant benefits from imitating
colleagues in Morocco.
