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Two perspectives on multiskilling and product-market volatility

  • DeVaro, Jed
  • Farnham, Martin

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 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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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 6 ()
Pages: 862-871

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Handle: RePEc:eee:labeco:v:18:y:2011:i:6:p:862-871
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  1. Oliver Hart & John Moore, 1999. "On the design of hierarchies: coordination versus specialization," LSE Research Online Documents on Economics 19340, London School of Economics and Political Science, LSE Library.
  2. 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.
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  13. 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.
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  15. Jed DeVaro, 2005. "The Effects of Self-Managed and Closely-Managed Teams on Labor Productivity and Product Quality: An Empirical Analysis of a Cross Section of Establishments," Labor and Demography 0510002, EconWPA.
  16. Kato, Takao & Owan, Hideo, 2007. "Market Characteristics, Intra-Firm Coordination, and the Choice of Human Resource Management Systems: Evidence from New Japanese Data," Working Papers 104-25, Department of Economics, Colgate University.
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