Development, social norms, and assignment to task.

Abstract

Economic development involves a structural transformation in the way people are allocated to tasks. There is a shift from self-provision to market exchange, facilitating specialization. There is also a shift from self-employment to wage employment in large firms and organizations, driven by innovation and increasing returns to scale. Changes in allocation mechanisms require changes in norms and attitudes. Because different labor assignment domains coexist, conflicts arise among norms that apply to different domains, possibly resulting in dysfunctional outcomes. I argue that religion, humanism, and schools have all played an important historical role in fostering the changes in social norms and attitudes that are needed to accompany structural changes in the way economies allocate workers to tasks.