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The Division of Labor and the Market for Organizations

Author

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  • Lindbeck, Assar

    (Stockholm University)

  • Snower, Dennis J.

    (Hertie School of Governance)

Abstract

The paper examines the determinants of the division of labor within firms. It provides an explanation of the pervasive observed changes in work organization away from the traditional functional departments and towards multi-tasking and job rotation. Whereas the existing literature on the division of labor within firms emphasizes the returns from specialization and the need for coordination of the work of different workers, the present analysis focuses on the returns from multi-tasking, which is shown to arise from informational and technological complementarities among tasks as well as from the exploitation of the versatility of human capital. The paper also explores how the move towards multi-tasking can affect the labor market, deriving implications for wage inequality, employment, and unemployment.

Suggested Citation

  • Lindbeck, Assar & Snower, Dennis J., 2000. "The Division of Labor and the Market for Organizations," IZA Discussion Papers 119, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp119
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    References listed on IDEAS

    as
    1. Lindbeck, Assar & Snower, Dennis J, 1996. "Reorganization of Firms and Labor-Market Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 315-321, May.
    2. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 299-322, National Bureau of Economic Research, Inc.
    3. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 809-839.
    4. Carmichael, H Lorne & MacLeod, W Bentley, 1993. "Multiskilling, Technical Change and the Japanese Firm," Economic Journal, Royal Economic Society, vol. 103(416), pages 142-160, January.
    5. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-991, September.
    6. Baumgardner, James R, 1988. "The Division of Labor, Local Markets, and Worker Organization," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 509-527, June.
    7. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    8. George J. Stigler, 1951. "The Division of Labor is Limited by the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 59(3), pages 185-185.
    9. Baumgardner, James R, 1988. "Physicians' Services and the Division of Labor across Local Markets," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 948-982, October.
    10. repec:hoo:wpaper:e-95-7 is not listed on IDEAS
    11. Xiaokai Yang & Jeff Borland, 2005. "A Microeconomic Mechanism For Economic Growth," World Scientific Book Chapters, in: An Inframarginal Approach To Trade Theory, chapter 18, pages 409-436, World Scientific Publishing Co. Pte. Ltd..
    12. Kim, Sunwoong, 1989. "Labor Specialization and the Extent of the Market," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 692-705, June.
    13. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-528, June.
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    Citations

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    Cited by:

    1. Fehn, Rainer, 2002. "Arbeitsmarktflexibilisierung und Arbeitslosigkeit," Discussion Paper Series 54, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    2. R. Antonietti, 2005. "The role of general and firm-specific training for new technology adoption and economic growth: a critical review," Working Papers 538, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Zon, Adriaan van & Antonietti, Roberto, 2005. "Education and Training in a Model of Endogenous Growth with Creative Destruction," Research Memorandum 010, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    4. Norbert Berthold & Rainer Fehn, 2003. "Unemployment in Germany: Reasons and Remedies," CESifo Working Paper Series 871, CESifo.

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    More about this item

    Keywords

    Division of labor; specialization; multi-tasking; organization of work; technological change; information flows;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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    1. Industrial Sociology (FCT-UNL)

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