Division of Labour & Specialisation (Cambridge (CIE) O Level Economics)
Revision Note
Written by: Steve Vorster
Reviewed by: Jenna Quinn
An Introduction to The Division of Labour and Specialisation
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 is 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
On a business level. For example, one firm may only specialise in manufacturing drill bits for concrete work
On a regional level. For example, 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 to the world
Advantages and Disadvantages for Workers, Firms and The Economy
Pros and Cons of the Division of Labour and Specialisation
Stakeholder | Pros | Cons |
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Worker |
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Firm |
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Economy |
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