The positive effect of the division of labor on output and production cost is one of the most fundamental assumptions in economics. The effect was first introduced in the pin factory analyses of Adam Smith, The Wealth of Nations (1776), and Charles Babbage, On the Economy of Machinery and Manufactures (1832). This paper analyses the effects of the division of labor by moving beyond Smith and Babbage's hypothetical observations of the division of labor and empirically testing and measuring its effect on output and production cost in a contemporary flute manufacturing plant. In doing so, this paper provides the first truly empirical measurement of the effects of the division of labor.
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