An alternative term for "division of labor," specialization of labor is an industrial relations and human resources term that refers to the segmenting of large, labor-intensive tasks into workable subtasks that may be done by different workers or different groups of workers. Labor specialization adds economies of scale as well as other advantages and flexibility for the employer, and could potentially offer a path of advancement for a worker in the form of expanded training opportunities.

As an economics term, specialization of labor applies to the application of the theory of competitive advantage on a national scale for countries that participate in international trade.

Specialization of Labor in Manufacturing

The principle of the assembly line is essentially built around the idea of labor specialization. For example, if a single worker was tasked with building an entire car, she'd require all the knowledge and skill to perform every job associated with that car's construction and likely require a level of theoretical understanding of how all the car's systems function together to ensure a final product that was safe and ran well. From a training standpoint alone, this is immediately impractical, as the necessary knowledge and skills would likely take years to impart. There would also be inefficiencies connected with creating a work station for a single car builder and time lost moving the car and worker between work stations for various tasks.

Instead, the job of building a car is broken out into sequential components, and these small, specific jobs are given to a single worker or group of workers. Instead of completing all tasks, a worker may now only place a single fender, for example, on every vehicle that comes through her workstation. The range of knowledge and skill ensures fast training and comparatively short times to gain expertise.

Drawbacks of Specialization in Production

The limited and repetitive nature of the subtasks a single worker undertakes may prove boring and lead to distraction and low productivity. An overly specialized production line could also create bottlenecks without sufficient supplies of workers. Cross-training is often a practical solution to both issues, keeping specialized workers engaged with a variety of tasks, and expanding labor resources for the employer.

Specialization of Labor in Trade

The theory of comparative advantage suggests that nations involved in trade should specialize in producing goods for which they have a low opportunity cost – that is, regional advantages that give them a jump over competition for international trade. For example, if a country is abundant in a certain raw material, industries that use that material might be able to operate more profitably in that country, rather than another with few natural resources that is subject to shipping costs and trade tariffs. A country with a large labor pool and low cost of living may also be attractive to a manufacturing company to relocate to take advantage of local specialization.

Problems With Specialization in Trade

Dependence on a single resource could create problems that affect that resource. For example, a country that depends heavily on a single crop could run into difficulty after a poor growing season or other issue that affects yield. Nonrenewable resources could be exhausted in the rush to exploit current demand.