TECHNOLOGY AT WORK
1Oclobi
1Oclobi
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
18<br />
Citi GPS: Global Perspectives & Solutions February 2015<br />
The Computer Revolution and the Squeezed Middle<br />
While early 20th century office machines increased demand for clerking workers,<br />
recent developments in computer technology have permitted such tasks to be<br />
automated.<br />
This trend began with the first commercial uses of computers around 1960 and<br />
continued through the development of the World Wide Web in the 1990s. Between<br />
1945 and 1980, as the cost of computing declined at an annual rate of 37%, most<br />
telephone operators were displaced. 35 In addition, the first industrial robot was<br />
introduced in the 1960s, and a decade later airline reservations systems led a wave<br />
of improvements in self-service technology.<br />
Throughout the 1980s and 1990s, the costs of computing fell even more rapidly, on<br />
average by 64% per year. 36 During this period bar-code scanners and cash<br />
machines penetrated retail and financial industries. Furthermore, the advent of the<br />
personal computer (PC) in the early 1980s, and its functions, contributed to the<br />
displacement of many copy typist jobs and allowed repetitive calculations to be<br />
automated.<br />
Employment in middle-skilled manufacturing<br />
and clerical occupations experienced a<br />
secular decline in the 1970s due to the<br />
impact of computers<br />
The impact of computers on labour markets is captured in an influential paper by<br />
David Autor, Frank Levy, and Richard Murnane, showing that middle-skilled<br />
manufacturing and clerical occupations have experienced a secular decline in<br />
employment since the 1970s. 37 The common denominator for these jobs, the<br />
authors document, is that they are intensive in rule-based activities (or routine<br />
tasks) which can be easily specified in computer code.<br />
Hence, the rapid improvements in computer technology over the last few decades<br />
have provided employers with ever cheaper machines that can replace humans in<br />
many middle-skilled activities such as bookkeeping, clerical work and repetitive<br />
production tasks. The result has been a shift in the occupational structure of the<br />
labour market in most developed countries over recent decades, with a hollowingout<br />
of traditional middle income jobs.<br />
Computers and industrial robots together<br />
have substituted for the same type of routine<br />
work, reallocating workers to manual service<br />
occupations<br />
Importantly, as computers and industrial robots have substituted for the same type<br />
of routine work that was once done by thousands of workers on assembly lines,<br />
most of these workers have reallocated to manual service occupations. 38 This is<br />
because, at least in the past, computers and robots have been less capable of<br />
driving trucks, waitressing and cleaning than most humans.<br />
At the same time, with falling prices of computing, problem-solving skills have<br />
become relatively productive, explaining the substantial employment growth in<br />
occupations involving cognitive work where skilled labour holds a comparative<br />
advantage. For example, text and data mining has improved the quality of legal<br />
research as constant access to market information has improved the efficiency of<br />
managerial decision-making — that is, tasks performed by skilled workers at the<br />
higher end of the income distribution.<br />
35 Nordhaus (2007)<br />
36 ibid<br />
37 Autor, Levy and Murnane (2003).<br />
38 Autor and Dorn (2013).<br />
© 2015 Citigroup