Equilibrium reorganization of work and aggregate level of employment
Modern mass production has been based on the principles of labor division and specialization. As emphasized by Adam Smith, the interaction of specialized workers within a factory allows to generate an enormous increase in labor productivity. Of course, the fragmentation of the production process must be planned and the interaction of the single operations must be coordinated. This requires appropriate forms of organization as developed by practitioners and management science (Ford or Taylor are prominent figures in this development). However, during the last decades new trends in work organization can be observed whose common features are the attempt to reduce central coordination costs by putting more weight on the workers’ responsibility and on decentralized interactions. The dream firm seems to be a self-organizing network of highly apt, self-motivated, versatile and socially competent individuals. By this one hopes to bring down the non-production requirements for organizing production (“Lean management” is one of the many recent catchwords). A rich picture of recent trends of reorganizing work is given in Snower . In the abstract framework of this study the manifold trends come down to a change in the production technology on the one hand, represented by the labor input coefficient A, and a change in the organization technology, represented by the function g (L, γ), on the other hand. The implications of the change in A are straightforward.
KeywordsWork Organization Central Coordination Full Employment Organization Technology Firm Owner
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