THE DIVISION OF LABOR AND ROUNDABOUT PRODUCTION: ALLYN YOUNG REVISITED

Authors: Sun G-Z.¹; Lio M.²

Source: Pacific Economic Review, Volume 8, Number 3, October 2003 , pp. 219-238(20)

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Abstract:

This paper investigates Allyn Young's two important doctrines concerning the division of labor and roundabout production. First, apart from advancing the state of knowledge, the progressive division of labor that can occur within a given population encourages the adoption of more specialized, differentiated intermediate goods in the production process. Second, the level of division of labor and the extent of the market depend on each other. Using a general equilibrium model with increasing returns to specialization, economies of complementarity between intermediate goods, and transaction costs, we demonstrate that the level of division of labor and the number of intermediate goods increase concurrently as transaction conditions are improved.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1468-0106.2003.00223.x

Affiliations: 1: University Of Macau and Monash University 2: National Sun Yat-Sen University

Publication date: 2003-10-01