Division of Labor
What is the Division of Labor?
Written by Jason Gordon
Updated at April 26th, 2023
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What is Division of Labor?
Division of labor concerns dividing the production of a good or service into a number of tasks that different workers perform, instead of all the tasks being done by the same person.
Adam Smith (1723–1790) published his famous book The Wealth of Nations in 1776 introduced the concept of division of labor.
How Does Division of Labor Increase Economic Output?
Division of labor increases efficiency and output through:
- Specialization - Developing a higher level of skill or proficiency through the repetition of finite tasks. It allows them to do what they do best while others do what they do best.
- Competency - Following specialization, employees become more competent (they work more quickly and at higher quality). In the same way, businesses increase efficiency through focusing on their core competencies.
- Economies of Scale - Economies of scale means that with higher levels of production the average cost of producing each individual unit declines. Higher competency allows for the higher level of production and ultimate cost savings.
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