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

Michaels, Guy (2007) The division of labor, coordination, and the demand for information processing. CEP Discussion Papers, CEPDP0811. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP0811

Abstract

Since Adam Smith’s time, the division of labor 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 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, 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 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.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2007 The Author
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
J - Labor and Demographic Economics > J4 - Particular Labor Markets > J44 - Professional Labor Markets and Occupations
M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M54 - Labor Management (team formation, worker empowerment, job design, tasks and authority, work arrangemetns, job satisfaction)
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 09 Aug 2013 08:40
Last Modified: 09 Aug 2013 08:40
URI: http://eprints.lse.ac.uk/id/eprint/51600

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