(i) Simple or Product-Based Division of Labour : When a person (or worker) specialises in the production of a particular commodity or service, it is called product-based division of labour. It is also known as simple (or occupational) division of labour. In traditional economies, a worker is specialised in the production of a single commodity. This is division of labour by profession.
Examples : Farmers, carpenters, blacksmiths, cobblers or washerman. In skilled professions also, we find specialisation. One specialises as a doctor, another as a lawyer, another as a teacher and so on.
(ii) Complex or Process-Based Division of Labour : In a modern economy, production of a good or service involves several processes. In this system the total work is divided into many small steps or processes. Each specialized function is undertaken by an individual or a group of individuals leading to the final product. This type of division of labour is further classified in following two categories: