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

48 Pages Posted: 23 May 2008

See all articles by Guy Michaels

Guy Michaels

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); London School of Economics & Political Science (LSE)

Date Written: June 2007

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.

Keywords: Division of Labour, Information Processing, Organization of Production., Technological Change

JEL Classification: D73, J44, M54, O33

Suggested Citation

Michaels, Guy and Michaels, Guy, The Division of Labour, Coordination, and the Demand for Information Processing (June 2007). CEPR Discussion Paper No. DP6358, Available at SSRN: https://ssrn.com/abstract=1136684

Guy Michaels (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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