The Division of Labour (Edexcel IGCSE Economics)

The Division of Labour

• Based on observations made during a visit to a pin factory, famous economist Adam Smith developed the ideas of specialisation and the division of labour

  • He noted that a single worker could not make more than 20 pins a day as it involved around 18 different processes, such as cutting the wire, sharpening the end, stamping the head, etc.

  • However, if the labour was divided up into different tasks and workers specialised in just that one task, Adam Smith estimated that just 10 workers could produce 48,000 pins per day

• The division of labour occurs when a task is broken up into several component tasks

• This allows workers to specialise by focusing on one (or a few) of the components that make up the production process and thereby gain significant skill in doing it

  • This results in higher output per worker, and so increases productivity

• Specialisation occurs on several different levels

  • On an individual level

    • E.g. A surgeon specialises in medical operating skills

  • On a business level

    • E.g. One firm may only specialise in manufacturing drill bits for concrete work

  • On a regional level

    • E.g. Silicon Valley has specialised in the tech industry

  • On a global level as countries seek to trade

    • E.g. Bangladesh specialises in textiles and exports them globally

Advantages and Disadvantages for Workers and Firms

Pros and Cons of the Division of Labour