The Division of Labor and Roundabout Production: Allyn Young Revisited

Posted: 2 Jan 2003

See all articles by Guang-Zhen Sun

Guang-Zhen Sun

Monash University - Department of Economics; Max Planck Institute for Research Into Economic Systems

Monchi Lio

National Sun Yat-sen University - Political Economics

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Abstract

This paper investigates Allyn Young's two important doctrines concerning the division of labor and roundabout production: Apart from advancement in the state of knowledge, the progressive division of labor, which can take place within a given population, brings about the adoption of more specialized, differentiated intermediate goods in the production process; 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.

Keywords: Allyn Young, Choice of Technology, Division of Labor, Increasing Returns, Roundabout Production, Transaction Costs

JEL Classification: L11, O12, O14

Suggested Citation

Sun, Guang-Zhen and Lio, Monchi, The Division of Labor and Roundabout Production: Allyn Young Revisited. Available at SSRN: https://ssrn.com/abstract=353841

Guang-Zhen Sun (Contact Author)

Monash University - Department of Economics ( email )

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Max Planck Institute for Research Into Economic Systems

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Monchi Lio

National Sun Yat-sen University - Political Economics ( email )

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Taiwan

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