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THE DIVISION OF LABOR IN THE FIRM
Author(s) -
IPPOLITO RICHARD A.
Publication year - 1977
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1977.tb01112.x
Subject(s) - economics , adam smith , division of labour , simple (philosophy) , neoclassical economics , wage , mathematical economics , human capital , human capital theory , capital (architecture) , labour economics , keynesian economics , microeconomics , market economy , philosophy , archaeology , epistemology , history
In this paper, Adam Smith's theory of labor specialization is formulated and tested. The restrictions in the theory are explicitly derived, and Smith's Theorem — that specialization will rise with the output rate — is rigorously stated. A simple human capital model is then employed to derive testable implications of the theory. Wage equations are estimated for the U.S. shipbuilding industry during World War II. The peculiarities of the war data notwithstanding, the results are strongly supportive of the theory.