A Benefit from the Division of Labor that Adam Smith Missed

Abstract

This paper argues that there is an important benefit from the division of labor that Adam Smith failed to mention, that is, the division of labor shortens the time required for capital formation and makes continuous roundabout production possible. The paper presents a simple general equilibrium model to demonstrate this benefit, which is referred to as the “value of time†benefit of the division of labor.the division of labor, time structure of production, capital formation, transaction costs