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Organizational Change and Skill Accumulation

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  • Caroli, Eve
  • Greenan, Nathalie
  • Guellec, Dominique

Abstract

We model the links between skills and changes in work organization. As the proportion of skilled workers increases, the economy travels through a sequence of organizational equilibria. We show that as the relative supply of skills increases the organization of work becomes more decentralized. Both skilled and unskilled workers become more autonomous and perform a wider range of tasks: decentralization spreads across firms at the expense of the old centralized organization based on a strict division of labor. Moreover, as firms switch to decentralization, their employment structure becomes more homogeneous and wage inequality stops decreasing. These predictions are compared with empirical evidence based on French establishment-level data and we find support for both of them. This suggests that the long-term increase in the skill level of the workforce may have been one important factor driving the recent introduction of new work practices by a large number of firms. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Caroli, Eve & Greenan, Nathalie & Guellec, Dominique, 2001. "Organizational Change and Skill Accumulation," Industrial and Corporate Change, Oxford University Press, vol. 10(2), pages 481-506, June.
  • Handle: RePEc:oup:indcch:v:10:y:2001:i:2:p:481-506
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    1. Nicole M. Fortin & Thomas Lemieux, 1997. "Institutional Changes and Rising Wage Inequality: Is There a Linkage?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 75-96, Spring.
    2. Claudia Goldin & Lawrence F. Katz, 1999. "Education and Income in the Early 20th Century: Evidence from the Prairies," NBER Working Papers 7217, National Bureau of Economic Research, Inc.
    3. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    4. Peter Cappelli, 1996. "Technology and skill requirements: implications for establishment wage structures," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 139-156.
    5. Nathalie Greenan & Dominique Guellec, 1998. "Firm Organization, Technology And Performance: An Empirical Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 6(4), pages 313-347.
    6. Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December.
    7. Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August.
    8. Nathalie Greenan, 1996. "Progrès technique et changements organisationnels : leur impact sur l'emploi et les qualifications," Économie et Statistique, Programme National Persée, vol. 298(1), pages 35-44.
    9. Paul Osterman, 1994. "How Common is Workplace Transformation and Who Adopts it?," ILR Review, Cornell University, ILR School, vol. 47(2), pages 173-188, January.
    10. Soskice, David W, 1993. "Social Skills from Mass Higher Education: Rethinking the Company-Based Initial Training Paradigm," Oxford Review of Economic Policy, Oxford University Press, vol. 9(3), pages 101-113, Autumn.
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