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The Division of Labor, Coordination, and the Demand for Information Processing

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Author Info
Guy Michaels
Abstract

Since Adam Smith's time, the division of labor in production has increased significantly, whileinformation processing has become an important part of work. This paper examines whether the needto coordinate an increasingly complex division of labor has raised the demand for clerical office workers, who process information that is used to coordinate production. In order to examine this question empirically, I introduce a measure of the complexity of an industry's division of labor that uses the Herfindahl index of occupations it employs, excluding clerks and managers. Using US data I find that throughout the 20th century more complex industries employed relatively more clerks, andrecent Mexican data shows a similar relationship. The relative complexity of industries is persistent over time and correlated across these two countries. I further document the relationship between complexity and the employment of clerks using an early information technology (IT) revolution that took place around 1900, when telephones, typewriters, and improved filing techniques were introduced. This IT revolution raised the demand for clerks in all manufacturing industries, but significantly more so in industries with a more complex division of labor. Interestingly, recent reductions in the price of IT have enabled firms to substitute computers for clerks, and I find that more complex industries have substituted clerks more rapidly.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0811.

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Date of creation: Jul 2007
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Handle: RePEc:cep:cepdps:dp0811

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Related research
Keywords: information processing division of labor technological change organization of production

Find related papers by JEL classification:
J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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References listed on IDEAS
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    Other versions:
  2. Leora Friedberg, 2003. "The impact of technological change on older workers: Evidence from data on computer use," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(3), pages 511-529, April.
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    Other versions:
  4. Duranton, Gilles & Jayet, Hubert, 2005. "Is the Division of Labour Limited By the Extent of the Market? Evidence from French Cities," CEPR Discussion Papers 5087, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. William D. Nordhaus, 2001. "The Progress of Computing," Cowles Foundation Discussion Papers 1324, Cowles Foundation, Yale University. [Downloadable!]
  7. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October. [Downloadable!] (restricted)
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  10. Dale W. Jorgenson, 2001. "Information Technology and the U. S. Economy," Harvard Institute of Economic Research Working Papers 1911, Harvard - Institute of Economic Research. [Downloadable!]
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    Other versions:
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