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

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Author Info
Michaels, Guy
Abstract

Since Adam Smith's time, the division of labour in production has increased significantly, while information processing has become an important part of work. This paper examines whether the need to coordinate an increasingly complex division of labour 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 labour 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, and recent 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 labour. 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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6358.

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Date of creation: Jun 2007
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Handle: RePEc:cpr:ceprdp:6358

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Related research
Keywords: Division of Labour; Information Processing; Organization of Production.; Technological Change;

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Find related papers by JEL classification:
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
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
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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