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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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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. BOUCEKKINE, Raouf & CRIFO, Patricia, 2003. "Human capital accumulation and the transition from specialization to multi-tasking," CORE Discussion Papers 2003080, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Jaime Ortega, 2001. "Job Rotation as a Learning Mechanism," Management Science, INFORMS, vol. 47(10), pages 1361-1370, October.
  3. Oliver Hart & John Moore, 1999. "On the Design of Hierarchies: Coordination Versus Specialization," STICERD - Theoretical Economics Paper Series 375, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  4. 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.
  5. Lindbeck, Assar & Snower, Dennis J., 1999. "Multi-Task Learning and the Reorganization of Work. From Tayloristic to Holistic Organization," IZA Discussion Papers 39, Institute for the Study of Labor (IZA).
  6. 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.
  7. Zoghi, Cindy & Levenson, Alec & Gibbs, Michael, 2005. "Why Are Jobs Designed the Way They Are?," IZA Discussion Papers 1529, Institute for the Study of Labor (IZA).
  8. 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).
  9. Hodaka Morita, 2005. "Multi-skilling, Delegation and Continuous Process Improvement: A Comparative Analysis of US-Japanese Work Organizations," Economica, London School of Economics and Political Science, vol. 72(285), pages 69-93, 02.
  10. 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.
  11. 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.
  12. Aoki, Masahiko, 1986. "Horizontal vs. Vertical Information Structure of the Firm," American Economic Review, American Economic Association, vol. 76(5), pages 971-83, December.
  13. 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.
  14. Wouter Dessein & Tano Santos, 2006. "Adaptive Organizations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 956-985, October.
  15. Morita, Hodaka, 2001. "Choice of Technology and Labour Market Consequences: An Explanation of U.S.-Japanese Differences," Economic Journal, Royal Economic Society, vol. 111(468), pages 29-50, January.
  16. 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.
  17. 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.
  18. 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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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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