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What is division of labor and specialization?

Division of labor means dividing the production process into various stages enable the workers to focus on specific tasks assigned to them.

Specialization takes place when workers are assigned to perform specific tasks in the production process. To be a competent worker, they will require less training and this will lead to increase in labor productivity, as a result firms will get benefited from economies of scale and increased efficiency.

Examples of specialization and division of labor

In the process of producing cars, there will be high degree of labor specialization.

  • Some workers will design the car.
  • Some will test the car.
  • Some workers will work on marketing.
  • Some workers will work on various sections.

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Scarcity and specialization

Specialization requires trade. It simply means countries that don’t produce oil get oil exported from other countries that has large reserves. The country with oil can also ask for something which they need. This helps in reducing the problem of scarcity.

Problems in specialization-

  • If worker do same type of duty daily which they have assigned to, it becomes boring after a certain point. High levels of specialization could lead to diseconomies in scale.
  • If an assembly line becomes highly specialized, production can be stopped if there is blockage in one area. That is why there should be more people specialized in different aspects.

Problems in specialization in trade-

  • Poor countries get encouraged in selling the non-renewable resources to other countries which is developing, in long run one could run out of resources.
  • Over specialization leads to countries becoming dependent on each other for a particular commodity.
  • With specialization, there will be intense competition to reduce costs and as a result wages will have to fall.

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