Organization, Skills and Technology: Evidence from a Panel of British and French Establishments

In this paper we investigate evidence for the ‘skill bias’ of organizational change (OC). These include the decentralization of authority, delayering of managerial functions and increased multi-tasking. We use several sources of panel data on British and French establishments. Three findings emerge: (i) organizational change tends to reduce the demand for unskilled workers in both countries; (ii) OC is retarded by increases in regional skill price differentials (a measure of the relative supply of skill); (iii) OC leads to greater productivity increases in establishments with larger initial skill endowments. We argue that OC, technology and human capital are complementary assets of the modern enterprise. The widespread introduction of new organizational forms may be an important factor in the declining demand for less skilled workers in OECD countries.