Division of labour

Updated: Aug 20, 2021

The specialization of workers in particular parts or operations of a production process. From the time of Adam Smith, the division of labour had been a recognized source of economies of scale and a basic reason for the development of an exchange economy. The techniques of division of labour which Adam Smith noticed in a pin-making factory have perhaps reached their ultimate development in modem motor-car assembly plants, where a particular worker’s function may consist entirely of tightening a particular set of bolts. The advantages of division of labour were also clearly documented by Adam Smith – the increase in skill and speed of operation which comes through specialization, together with the time saved by workers not having to switch from one operation to another. In a broader sense, the division of labour has led to the modern exchange economy. Rather than attempting to produce each one of his needs for himself, the individual specializes and obtains his other requirements from other specialists by exchange through the medium of money.

Reference: The Penguin Dictionary of Economics, 3rd edt.

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