Technology, Complexity and Information: The Evolution of Demand for Office Workers

Abstract

This paper examines the effects of technology on information processing over more than a century, using industry-level variation in the demand for clerical office workers. Clerks are skilled workers who generate, store, and communicate information that is used by manufacturing firms to coordinate production. I find that production technology affects the demand for clerks. In particular, industries with a more complex division of labor employ relatively more clerks. I document this result using an early information technology (IT) revolution that took place around 1900, when telephones, typewriters, and improved filing techniques were introduced to the office. 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. The increased demand for clerks raised the aggregate demand for skill, likely contributing to the onset of the High School Movement and to women's increased labor force participation. Interestingly, recent changes in IT have enabled firms to substitute computers for clerks, providing a concrete case in which technology and a specific set of skills are substitutes rather than complements.