In Discussion Paper No. 1323, Assar Lindbeck and Research Fellow Dennis Snower analyse the contemporary organisational restructuring of production and work and derives some salient implications for the labour market. The authors then investigate the consequences of this process for wage and employment determination. The analysis focuses on the switch from occupational specialization in `Tayloristic' organisations to work rotation among multiple tasks in `holistic' organisations.

The paper shows how the restructuring process is driven by two important forces: (i) advances in information and production technologies that favour holistic organisations, and (ii) increases in the supply of employees with general human capital, permitting them to perform multiple tasks and to exploit the technological advances above. The analysis indicates that the restructuring process creates demands for new combinations of skills and thereby `resegments' the labour market, raising the wages and job opportunities of some workers relative to others. The result is rising labour market segmentation in the sense of greater inequality of employment opportunities. In a later `entry phase', dominated by the entry of new holistic organisations, the Tayloristic sector remains constant and the tertiary sector contracts. Here the labour market segmentation can be expected to subside, in the sense that high-wage employment opportunities now grow at the expense of employment in the tertiary sector. The paper provides a possible explanation for the growth of female employment relative to that of males and the narrowing of the male-female wage differentials in many advanced industrial countries over the past decade. The analysis thereby provides an organisational rationale for the improving fortunes of women in the labour.