Skill-Biased Organizational Change? Evidence from A Panel of British and French Establishments

TLDR

Organizational changes include decentralization of authority, delayering of managerial functions, and increased multitasking. This paper investigates the determination and consequences of organizational changes in British and French establishments and argues that OC and skills are complementary. The authors show that technical change complements human capital, yet OC effects are independent of technological change. The study finds that organizational changes reduce demand for unskilled workers, lower regional skill price differentials, and boost productivity more in establishments with higher initial skill endowments.

Abstract

This paper investigates the determination and consequences of organizational changes (OC) in a panel of British and French establishments. Organizational changes include the decentralization of authority, delayering of managerial functions, and increased multitasking. We argue that OC and skills are complements. We offer support for the hypothesis of "skill-biased" organizational change with three empirical findings. First, organizational changes reduce the demand for unskilled workers in both countries. Second, OC is negatively associated with increases in regional skill price differentials (a measure of the relative supply of skill). Third, OC leads to greater productivity increases in establishments with larger initial skill endowments. Technical change is also complementary with human capital, but the effects of OC is not simply due to its correlation with technological change but has an independent role.