Revisiting Adam Smith and the Division of Labor: New Evidence from U.S. Occupational Data, 1860–1940

Nicholas A. Carollo, Elior Cohen and Jingyi Huang ()
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Nicholas A. Carollo: https://www.federalreserve.gov/econres/nick-a-carollo.htm

No RWP 25-08, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: Using novel occupational data from the United States between 1860 and 1940, we evaluate Adam Smith’s core propositions regarding the division of labor, market size, innovation, and productivity. We document significant growth in occupational diversity during this period using new measures of labor specialization that we construct from workers’ self-reported job titles in the decennial census. Consistent with Smith’s hypotheses, we find strong empirical evidence that labor specialization increases with the extent of the market, is facilitated by technological innovation, and is ultimately associated with higher manufacturing productivity. Our findings also extend Smith’s narrative by highlighting the role of organizational changes and innovation spillovers during the Second Industrial Revolution. These results speak to the enduring relevance of Smith’s insights in the context of an industrializing economy characterized by large firms, complex organizational structures, and rapid technological change.

Keywords: division of labor; occupations; productivity growth; technological change (search for similar items in EconPapers)
JEL-codes: D24 J24 N11 O14 (search for similar items in EconPapers)
Pages: 33
Date: 2025-09-03
New Economics Papers: this item is included in nep-his, nep-lma, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedkrw:101725

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DOI: 10.18651/RWP2025-08

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