IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2602.16078.html

AI as Coordination-Compressing Capital: Task Reallocation, Organizational Redesign, and the Regime Fork

Author

Listed:
  • Alex Farach

Abstract

Task-based models of AI and labor hold organizational structure fixed. We introduce agent capital: AI that reduces coordination costs, expanding spans of control and enabling endogenous task creation. Five propositions characterize how coordination compression affects output, hierarchy, manager demand, wage dispersion, and the task frontier. The model generates a regime fork: the same technology produces broad-based gains or superstar concentration depending on who benefits from coordination compression. Simulations with heterogeneous workers confirm sharp regime divergence. Economy-wide inequality falls in all regimes through employment expansion, but the manager-worker wage gap widens universally. The distributional impact hinges on who controls organizational elasticity.

Suggested Citation

  • Alex Farach, 2026. "AI as Coordination-Compressing Capital: Task Reallocation, Organizational Redesign, and the Regime Fork," Papers 2602.16078, arXiv.org, revised Mar 2026.
    • Handle: RePEc:arx:papers:2602.16078
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2602.16078
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    2. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    3. Alex Farach & Alexia Cambon & Jared Spataro, 2025. "Evolving the Productivity Equation: Should Digital Labor Be Considered a New Factor of Production?," Papers 2505.09408, arXiv.org.
    4. Erik Brynjolfsson & Danielle Li & Lindsey Raymond, 2025. "Generative AI at Work," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 140(2), pages 889-942.
    5. Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, INFORMS, vol. 60(12), pages 2859-2885, December.
    6. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
    7. Ajay K. Agrawal & John McHale & Alexander Oettl, 2026. "Enhancing Worker Productivity Without Automating Tasks: A Different Approach to AI and the Task-Based Model," NBER Working Papers 34781, National Bureau of Economic Research, Inc.
    8. Patrick Bolton & Mathias Dewatripont, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 809-839.
    9. Luis Garicano & Esteban Rossi-Hansberg, 2006. "Organization and Inequality in a Knowledge Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1383-1435.
    10. Xienan Cheng & Mustafa Dogan & Pinar Yildirim, 2025. "Artificial Intelligence in Team Dynamics: Who Gets Replaced and Why?," NBER Working Papers 34259, National Bureau of Economic Research, Inc.
    11. Enrique Ide & Eduard Talamas, 2023. "Artificial Intelligence in the Knowledge Economy," Papers 2312.05481, arXiv.org, revised May 2025.
    12. Fasheng Xu & Jing Hou & Wei Chen & Karen Xie, 2025. "Generative AI and Organizational Structure in the Knowledge Economy," Papers 2506.00532, arXiv.org, revised Mar 2026.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giampaolo Bonomi, 2026. "The Division of Understanding: Specialization and Democratic Accountability," Papers 2604.09871, arXiv.org.
    2. Fasheng Xu & Jing Hou & Wei Chen & Karen Xie, 2025. "Generative AI and Organizational Structure in the Knowledge Economy," Papers 2506.00532, arXiv.org, revised Mar 2026.
    3. Tobias Stucki & Daniel Wochner, 2019. "Technological and organizational capital: Where complementarities exist," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 458-487, June.
    4. Sotiris Blanas, 2024. "The distinct effects of information technologies and communication technologies on skill demand," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 63(4), pages 442-490, October.
    5. Filippo Belloc & Gabriel Burdin & Fabio Landini, 2020. "Corporate Hierarchies and Labor Institutions," Department of Economics University of Siena 827, Department of Economics, University of Siena.
    6. Freund, L. B., 2022. "Superstar Teams," Cambridge Working Papers in Economics 2276, Faculty of Economics, University of Cambridge.
    7. repec:cam:camjip:2235 is not listed on IDEAS
    8. Huang,Zhangkai & Li,Lixing & Ma,Guangrong & Xu,L. Colin, 2015. "Hayek, local information, and the decentralization of state-owned enterprises in China," Policy Research Working Paper Series 7321, The World Bank.
    9. Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, INFORMS, vol. 60(12), pages 2859-2885, December.
    10. Luis Medrano-Adán & Vicente Salas-Fumás & J. Sanchez-Asin, 2015. "Heterogeneous entrepreneurs from occupational choices in economies with minimum wages," Small Business Economics, Springer, vol. 44(3), pages 597-619, March.
    11. Garicano, Luis & Hubbard, Thomas N, 2007. "Managerial Leverage Is Limited by the Extent of the Market: Hierarchies, Specialization, and the Utilization of Lawyers' Human Capital," Journal of Law and Economics, University of Chicago Press, vol. 50(1), pages 1-43, February.
    12. David J. Deming, 2017. "The Growing Importance of Social Skills in the Labor Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1593-1640.
    13. İ. Akçomak & Lex Borghans & Bas Weel, 2011. "Measuring and Interpreting Trends in the Division of Labour in the Netherlands," De Economist, Springer, vol. 159(4), pages 435-482, December.
    14. Lorenzo Caliendo & Esteban Rossi-Hansberg, 2012. "The Impact of Trade on Organization and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1393-1467.
    15. Antonelli, Cristiano & Tubiana, Matteo, 2020. "Income inequality in the knowledge economy," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 153-164.
    16. Byoung-Hyoun Hwang & José María Liberti & Jason Sturgess, 2019. "Information Sharing and Spillovers: Evidence from Financial Analysts," Management Science, INFORMS, vol. 65(8), pages 3624-3636, August.
    17. Piyush Gulati & Arianna Marchetti & Phanish Puranam & Victoria Sevcenko, 2025. "Generative AI Adoption and Higher Order Skills," Papers 2503.09212, arXiv.org, revised Jun 2025.
    18. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    19. Luis Garicano & Esteban Rossi-Hansberg, 2015. "Knowledge-Based Hierarchies: Using Organizations to Understand the Economy," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 1-30, August.
    20. Luis Medrano‐Adán & Vicente Salas‐Fumás & Javier Sanchez‐Asin, 2024. "Organization of production and income inequality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(3), pages 582-604, August.
    21. Morikawa, Masayuki, 2015. "Are large headquarters unproductive?," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 422-436.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2602.16078. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.