Lesson: What Is Economics and Why It Is Important 

Why the Division of Labor Increases Production: Specialization

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  • The first way that division of labor increases production is called specialization of location.
  • Specialization lets workers focus on specific parts of the production process.
  • Specialization can be based on the location (geography) where the work takes place. Some locations are more appropriate for work than others.

  1. Specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage.

People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices shaped by interests and talents. For instance, only those with medical degrees qualify to become doctors.

For some goods, geography affects specialization. For example, it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota. If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in doing what they do best, they will be more effective than if they produce a combination of things, some of which they are good at, and some of which they are not.

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