Technological progress, organizational change and the size of the Human Resources Department



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. Coordination costs could take several forms, which are
surveyed in detail in the next section. In particular, we shall distinguish between
horizontal coordination costs, which involve the costs of coordinating the tasks ac-
complished by each production worker, and vertical coordination costs, which reflect
coordinating different workers. In our model, the first can reduce the coordination
costs by assigning more workers to pure coordination non-productive tasks. We
then examine how the economy reacts to permanent exogenous technological accel-
erations. The model is able to reproduce the three stylized facts outlined above.
Importantly enough, the model delivers a permanent trend towards multi-tasking
and human capital accumulation following permanent technological accelerations,
while the size of the human resources department, that is the fraction of workers
devoted to reduce coordination costs, is also significantly raised and then reduced.

The paper produces two important contributions to the literature. In first place,
it brings out a novel modelling of coordination costs and the associated human
resources management workers. The framework is additionally found to replicate
the recent evidence on the evolution of the size of human resources departments
in the OECD countries following the ICT revolution. Second, it generalizes the
findings of Boucekkine and Crifo (2007) in many respects. These authors have
produced a simple OLG model with a fixed given number of tasks with human
capital accumulation but without coordination costs. In this paper, the number of
tasks is endogenous in the presence of well-motivated coordination costs. In this
sense, it has a much broader scope than Boucekkine and Crifo’s 2007 model.

The paper is organized as follows: Section 2 defines precisely coordination costs.
Section 3 presents the setup of the general equilibrium model and derives the opti-
mality and equilibrium conditions. Section 4 derives the steady-state values and the
associated comparative statics. Section 5 reports some simulations exercises to ana-
lyze the impact of permanent exogenous technological accelerations on the economy.
Section 6 concludes, while the main computations are reported in the Appendix.

2  Defining and accounting for coordination costs

As we analyze within-firm work organization, the evidence we report here is focused
on “internal” coordination costs, i.e. intra (or within) firm coordination costs2 .

From a theoretical perspective, the literature on coordination problems mostly
focuses on the division of labour and the returns to workers’ specialization (Yang

2 External coordination costs correspond for instance to the costs of finding suppliers, negotiating
contracts and paying bills to them and such issues are outside the scope of our model. External
coordination costs are examined for instance in the transaction costs literature or in the industrial
organization literature.



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