Upstairs, Downstairs: Computers and Skills on Two Floors of a Large Bank

Abstract

Many empirical studies document a positive correlation between workplace computerization and the employment of skilled labor in production. Does this mean that computers necessarily substitute for the tasks performed by less educated workers and complement the tasks performed by more educated workers? We explore this question by positing that computerization leads to the automation of tasks that can be fully described in terms of procedural or "rules-based" logic. This process typically leaves many tasks to be performed by humans. Management decisions play a key role - at least in the short run - in determining how these tasks are organized into jobs, with potentially significant implications for skill demands. We illustrate how this conceptual framework helps to interpret the consequences of the introduction of digital check imaging in two back office departments of a large bank. We argue that the model has applicability to many organizations and helps to reconcile differences between the approaches economists and sociologists typically take to studying the consequences of technological changes.

Keywords: Skill biased technological change, computers, banking

JEL Classification: J3, O3