Technological Progress, Organizational Change and the ICT Revolution

The recent Information and Communication Technologies (ICT) revolution has favoured the development of numerous innovative workplace practices in most OECD countries. Work organization inside firms evolved from specialization to multi-tasking, and flexible forms of workplace organization have largely diffused in most OECD economies. Parallel to this trend, we can also observe an increasing employment share of skilled workers in major OECD countries during the 1990s along with the dissemination of ICT. A definitely much less stressed aspect of organizational change, which is central in this paper, is the impact on human resources departments. In general, one would expect that the role of such department will be significantly altered in a situation where flexible forms of work organization are so massively adopted. Indeed, a quick look at the data confirms this intuition. In particular, the management ratio (managers as percentage of the workforce) increased in many OECD countries during the twentieth century, but started decreasing in the early 2000s. In France for instance, the percentage of workers employed in managerial and professional specialty occupations rose from 7.1% in 1982 to 11.1% in 2000 and decreased to 4.8% in 2004. Similarly, this ratio ranges from 10.5% in 1970 to 14.6% in 2000 and 13.9% in 2004 in the United States. In the light of all these data, the evolution of skills, job content and work organization observed in many OECD countries over the past decades can be summarized in the following three main characteristics: an increase in the proportion of workers employed in managerial occupations, together with a recent decrease since the ICT revolution; the diffusion of innovative workplace practices based on multi-tasking and computer use; an increase in skills requirements. This paper studies the determination of the optimal number of tasks performed per worker in an economy where individuals devote time to production and human capital accumulation, and where multi-tasking both increases production and gives rise to coordination costs. In particular, we shall distinguish between horizontal coordination costs, which involve the costs of coordinating the tasks accomplished by each production worker, and vertical coordination costs, which reflect coordinating different workers and mainly concern workers employed in human resources services. We then examine how the economy reacts to permanent exogenous technological accelerations, and we find that the model is able to reproduce the three stylized facts outlined above.