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The division of labor, coordination, and the demand for information processing

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  • Guy Michaels

Abstract

The Division of Labour, Coordination, and the Demand for Information Processing* 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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File URL: http://eprints.lse.ac.uk/3251/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3251.

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Length: 48 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:ehl:lserod:3251

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Keywords: division of labour; information processing; organization of production and technological change;

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References

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  1. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 781-809, October.
  2. 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.
  3. Luis Garicano & Esteban Rossi-Hansberg, 2005. "Organization and Inequality in a Knowledge Economy," NBER Working Papers 11458, National Bureau of Economic Research, Inc.
  4. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  5. Goldin, Claudia, 1998. "America's Graduation from High School: The Evolution and Spread of Secondary Schooling in the Twentieth Century," The Journal of Economic History, Cambridge University Press, vol. 58(02), pages 345-374, June.
  6. William D. Nordhaus, 2001. "The Progress of Computing," Cowles Foundation Discussion Papers 1324, Cowles Foundation for Research in Economics, Yale University.
  7. Dale W. Jorgenson, 2001. "Information Technology and the U. S. Economy," Harvard Institute of Economic Research Working Papers 1911, Harvard - Institute of Economic Research.
  8. Leora Friedberg, 2001. "The Impact of Technological Change on Older Workers: Evidence from Data on Computer Use," NBER Working Papers 8297, National Bureau of Economic Research, Inc.
  9. Dale W. Jorgenson, 2001. "Information Technology and the U.S. Economy," American Economic Review, American Economic Association, vol. 91(1), pages 1-32, March.
  10. Jacques Crémer & Luis Garicano & Andrea Prat, 2007. "Language and the Theory of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 373-407, 02.
  11. Claudia Goldin & Lawrence F. Katz, 1996. "The Origins of Technology-Skill Complementarity," NBER Working Papers 5657, National Bureau of Economic Research, Inc.
  12. Richard K. Fleischman & Thomas N. Tyson, 1993. "Cost accounting during the industrial revolution. the present state of historical knowledge," Economic History Review, Economic History Society, vol. 46(3), pages 503-517, 08.
  13. Paul Osterman, 1986. "The impact of computers on the employment of clerks and managers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 39(2), pages 175-186, January.
  14. Garicano, Luis & Hubbard, Thomas, 2003. "Specialization, Firms and Markets: The division of Labour Between and Within Law Firms," CEPR Discussion Papers 3699, C.E.P.R. Discussion Papers.
  15. 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.
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Cited by:
  1. Giuseppe Berlingieri, 2013. "Outsourcing and the rise in services," LSE Research Online Documents on Economics 51532, London School of Economics and Political Science, LSE Library.
  2. Thomas Philippon & Ariell Reshef, 2009. "Wages and Human Capital in the U.S. Financial Industry: 1909-2006," NBER Working Papers 14644, National Bureau of Economic Research, Inc.
  3. Ariell Reshef, 2008. "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation," 2008 Meeting Papers 235, Society for Economic Dynamics.
  4. Poschke, Markus, 2014. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," IZA Discussion Papers 7991, Institute for the Study of Labor (IZA).
  5. Ariell Reshef, 2012. "Online Appendix to "Is Technological Change Biased Towards the Unskilled in Services? An Empirical Investigation"," Technical Appendices 11-241, Review of Economic Dynamics.

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