Final answer:
The Putting-Out System was a pre-industrial labor system in which rural families produced goods at home for merchants, using materials supplied by the merchants. It allowed entrepreneurs to reduce labor costs and was a step towards the industrialization of manufacturing.
Step-by-step explanation:
The Putting-Out System, also known as the cottage industry, was a labor system widely used during the early phases of the Industrial Revolution. It was a way for merchants and entrepreneurs to utilize the labor of rural families by providing them with raw materials to produce goods in their own homes. These families, who were not skilled artisans, could work at their own pace, supplementing their agricultural income without the constraints of factory work.
Entrepreneurs would then collect the finished goods, pay the families for their labor, and sell the products at a higher price in urban markets. This system allowed merchants to cut production costs significantly, as they did not have to pay the high wages associated with skilled labor or the overheads of running a production facility. The Putting-Out System led to increased manufacturing capabilities without the need to establish factories, paving the way for more sophisticated forms of industrial production.