Publications
Publications
- 2020
Why Do Firms Automate Production, and How Do They Adjust? Evidence from the Bell Telephone System over the 20th Century
By: Daniel P. Gross and James J. Feigenbaum
Abstract
Over the course of the 20th century, AT&T's operating companies replaced telephone operators with mechanical switching and dial telephones. Yet it took AT&T 30 years from the invention of the technology to begin using it, and another 60 years to finish installing it across the telephone network. In this paper, we investigate why it took nearly a century to fully automate telephone operation. Using AT&T archival records and newly-collected data on local installations of mechanical switching, we show that deficiencies in the technology delayed initial adoption, and a combination of economies of scale, a constrained supply of qualified operators, and wage pressures explain the sequence and timing of its diffusion thereafter. AT&T adjusted to mechanization by allocating new and residual tasks to other categories of workers. We find that the automatic technology ultimately supported the growth of AT&T's residential service.
Keywords
Employment; Labor; Technology Adoption; Technology Networks; History; Telecommunications Industry; United States
Citation
Gross, Daniel P., and James J. Feigenbaum. "Why Do Firms Automate Production, and How Do They Adjust? Evidence from the Bell Telephone System over the 20th Century." Working Paper, May 2020.