Research Seminar: Organizational Frictions to Automation, and Its Effects on Firms, Workers, and Labor Markets


Monday, March 28, 2022, 10:15am to 11:30am


Zoom (registration information below)

Speaker: Daniel P. Gross, Assistant Professor, Duke's Fuqua School of Business

Abstract: AT&T was the largest U.S. firm for most of the 20th century. Telephone operators once comprised over 50% of its workforce, but in the late 1910s it initiated a decades-long process of automating telephone operation with mechanical call switching---a technology first invented in the 1880s. This talk will cover results from two papers. In one, we study what drove AT&T to do so, and why it took one firm nearly a century to automate this one function. In the second, we study how automation affected the labor market for young women.

On the firm side, we find that interdependencies between call switching and nearly every other part of the business were obstacles: the manual switchboard was the fulcrum of a complex production system which had developed around it, and automation only began after the firm and automatic technology were adapted to work together. Even then, automatic switching was only profitable for AT&T in larger markets---hence diffusion expanded as costs declined and service areas grew. Automation supported AT&T's continued growth, generating a positive feedback loop between scale and automation that reinforced AT&T's high market share in local markets.

On the worker side, we find that although automation eliminated one of the most common jobs for young American women of this era, it did not affect future cohorts' overall employment: the decline in operators was counteracted by reinstating demand in middle-skill clerical jobs and lower-skill service jobs. Incumbent (already-employed) telephone operators were most impacted by automation, and a decade later were more likely to be in lower-paying occupations or have left the labor force entirely.

Bio: Daniel P. Gross is an assistant professor at Duke's Fuqua School of Business, which he joined in 2020 after several years on the faculty at Harvard Business School. His research has two primary branches: (1) crisis innovation policy and strategy, including the effects of crisis R&D efforts on post-crisis innovation, entrepreneurship, industry dynamics, and regional economies; and (2) the effects of automation on workers, firms, and labor markets. He previously also studied the use of incentives and other tools in managing creative workers within organizations. Professor Gross' research frequently uses historical examples of industries and eras undergoing significant technological change as a lens into the present and future.

Please register in advance, and contact Chuck McKenney with any questions. The seminar will be hybrid, with Daniel presenting in-person for the Harvard community only in WEXNER W-G02.