The Division of Labor and Roundabout Production: Allyn Young Revisited
Posted: 2 Jan 2003
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: Suggested Citation