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

Abstract

Many studies document a positive correlation between workplace computerization and employment of skilled labor in production. Why does this correlation arise? The authors posit that improvements in computer-based technology create incentives to substitute machinery for people in performing tasks that can be fully described by procedural or "rules-based" logic and hence performed by a computer. This process typically leaves many tasks unaltered, and management plays a key role - at least in the short run - in determining how these tasks are organized into jobs, with significant implications for skill demands. This conceptual framework proves useful in interpreting how jobs were affected by the introduction of digital check imaging in two departments of a large bank. In one department, the tasks not computerized were subdivided into narrow jobs; in the other department, management combined multiple linked tasks to create jobs of greater complexity. The framework may be applicable to many organizations.

JEL Classification: J3, O3