Abstract

A fundamental principle of economics with which Adam Smith begins The Wealth of Nations is the division of labor. Some firms, however, have been pursuing a practice called job rotation, which assigns each worker not to a single and specific task but to a set of several tasks among which he or she rotates with some frequency. We examine the practice of job rotation as a serious alternative to specialization, with three objectives. The first is to consider current and historical examples of job rotation, in addition to those in Japanese firms, in order to examine the variety of contexts in which job rotation has been practiced. Second, we develop a simple model of work organization in order to examine the cost and benefits of job rotation and to identify factors that make it the preferred organization of work. Extending the model in light of the available evidence, we critically examine the previous explanations of job rotation and identify some of the other, previously unnoticed, benefits such as reduced possibilities of shirking because of peer pressure. As a third objective, we evaluate the benefits of job rotation with respect to the organizational form of firms, particularly remuneration schemes and worker participation in decision making.

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