The Concise Encyclopedia of Economics
FEATURED TOPIC

Division of Labor

Michael Munger

Division of labor combines specialization and the partition of a complex production task into several, or many, sub-tasks. Its importance in economics lies in the fact that a given number of workers can produce far more output using division of labor compared to the same of number of workers each working alone. Interestingly, this is true even if those working alone are expert artisans. The production increase has several causes. According to Adam Smith, these include increased dexterity from learning, innovations in tool design and use as the steps are defined more clearly, and savings in wasted motion changing from one task to another....

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ALSO OF INTEREST

Corporate Taxation

Rob Norton

Public Choice

William F. Shughart II

Industrial Revolution and the Standard of Living

Clark Nardinelli

Standards of Living and Modern Economic Growth

John V. C. Nye

Public Choice

William F. Shughart II

Immigration

George J. Borjas

Health Care

Michael A. Morrisey

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FEATURED BIOGRAPHIES

James A. Mirlees

(1936-)

In 1996 James Mirrlees and William Vickrey were awarded the Nobel Prize in economics "for their fundamental contributions to the economic theory of incentives under asymmetric information." Mirrlees's main contribution was some highly complex mathematics that allowed him to solve a problem in taxation that William Vickrey had posed but had not been able to answer. Many economists, including Mirrlees, want to use the tax system to achieve a higher degree of equality than would otherwise obtain. This means taking a substantial amount of the additional income of high-income people, which would imply high marginal tax rates on them. But when the government imposes such high marginal tax rates on the highest-income people, it reduces the incentive of the most productive people to be productive. There is, in short, a trade-off between equality and efficiency....

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Douglass C. North

(1920-2015)

Douglass North shared the 1993 Nobel Prize in economics with Robert Fogel "for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change."...

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