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Two Perspectives on Multiskilling and Product Market Volatility

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  • DeVaro, Jed
  • Farnham, Martin

Abstract

We study the effect of product market volatility on a firm’s choice between multiskilling and specialization. We construct a theoretical model that captures the tradeoff between multiskilling (which gives greater flexibility to reassign workers in production) and specialization (which provides workers with the expertise to respond to product market signals in their area of specialty). Using data from the 2004 WERS, a nationally-representative cross section of British establishments, we find that greater volatility is associated with greater specialization. This result holds both inside and outside of manufacturing, but consistent with our model, it holds only in multi-product establishments and not in single-product ones.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23089.

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Date of creation: 11 Mar 2010
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Handle: RePEc:pra:mprapa:23089

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Keywords: job design; training;

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  1. Carmichael, H Lorne & MacLeod, W Bentley, 1993. "Multiskilling, Technical Change and the Japanese Firm," Economic Journal, Royal Economic Society, vol. 103(416), pages 142-60, January.
  2. Rob Simmons & David Berri, 2009. "Gains from Specialization and Free Agency: The Story from the Gridiron," Review of Industrial Organization, Springer, vol. 34(1), pages 81-98, February.
  3. Kato, Takao & Owan, Hideo, 2007. "Market Characteristics, Intra-Firm Coordination, and the Choice of Human Resource Management Systems: Evidence from New Japanese Data," IZA Discussion Papers 3105, Institute for the Study of Labor (IZA).
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  5. Oliver Hart & John Moore, 1999. "On the Design of Hierarchies: Coordination Versus Specialization," NBER Working Papers 7388, National Bureau of Economic Research, Inc.
  6. Eriksson, Tor & Ortega, Jaime, 2004. "The Adoption of Job Rotation: Testing the Theories," Working Papers 04-3, University of Aarhus, Aarhus School of Business, Department of Economics.
  7. Aoki, Masahiko, 1986. "Horizontal vs. Vertical Information Structure of the Firm," American Economic Review, American Economic Association, vol. 76(5), pages 971-83, December.
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  9. Elizabeth Webster, 2003. "Firms' Decisions to Innovate and Innovation Routines," Melbourne Institute Working Paper Series wp2003n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  10. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
  11. Itoh, Hideshi, 1994. "Job design, delegation and cooperation: A principal-agent analysis," European Economic Review, Elsevier, vol. 38(3-4), pages 691-700, April.
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  13. Boucekkine, Raouf & Crifo, Patricia, 2008. "Human Capital Accumulation And The Transition From Specialization To Multitasking," Macroeconomic Dynamics, Cambridge University Press, vol. 12(03), pages 320-344, June.
  14. Hodaka Morita, 2002. "Multiskilling, Delegation, and Continuous Process Improvement: A Comparative Analysis of U.S.-Japanese Work Organizations," Labor and Demography 0207004, EconWPA.
  15. Metin M. Cosgel & Thomas J. Miceli, 1999. "Job Rotation: Cost, Benefits, and Stylized Facts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(2), pages 301-, June.
  16. Paul Osterman, 1994. "How common is workplace transformation and who adopts it?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(2), pages 173-188, January.
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Cited by:
  1. Prasad, Suraj & Tran, Hien, 2013. "Work practices, incentives for skills, and training," Labour Economics, Elsevier, vol. 23(C), pages 66-76.

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