To process novel sentences, language models (LMs) must generalize
compositionally -- combine familiar elements in new ways. What aspects of a
model's structure promote compositional generalization? Focusing on
transformers, we test the hypothesis, motivated by recent theoretical and
empirical work, that transformers generalize more compositionally when they are
deeper (have more layers). Because simply adding layers increases the total
number of parameters, confounding depth and size, we construct three classes of
models which trade off depth for width such that the total number of parameters
is kept constant (41M, 134M and 374M parameters). We pretrain all models as LMs
and fine-tune them on tasks that test for compositional generalization. We
report three main conclusions: (1) after fine-tuning, deeper models generalize
better out-of-distribution than shallower models do, but the relative benefit
of additional layers diminishes rapidly; (2) within each family, deeper models
show better language modeling performance, but returns are similarly
diminishing; (3) the benefits of depth for compositional generalization cannot
be attributed solely to better performance on language modeling or on
in-distribution data