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Division of Labor and Switch Cost

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  • Ang, Joshua Ping

Abstract

Specialized production tasks are often performed by laborers equipped with the same technical capabilities to accomplish other tasks equally well. I demonstrate how production among laborers given identical technology with no comparative advantage leads to a complete specialization of different tasks. The switch cost between production tasks is formalized to show how the divi- sion of labor maximizes the output with the same technology among laborers. The degree of specialization is limited by the cost of switching among tasks. The improvement in technology in production that reduces switch cost makes workers choose to be less specialized.

Suggested Citation

  • Ang, Joshua Ping, 2019. "Division of Labor and Switch Cost," MPRA Paper 95353, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95353
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    File URL: https://mpra.ub.uni-muenchen.de/95353/1/MPRA_paper_95353.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Specialization; Switch cost; Division of Labor; Production;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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