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AI, Task-based Production in General Equilibrium and Distribution of Labour Incomes

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Listed:
  • Rajat Acharyya
  • Sugata Marjit

Abstract

In a multi-sector general equilibrium model of task-based production, we examine the impact of two types of AI-driven finite changes, one in production-tasks in an AI-prone or AI-applicable sector and the other in the sector-composition of the economy, on the real wage and distribution of wage-income among workers of different skills. We establish that, contrary to the conventional wisdom of a sector-specific small Hicks-neutral type technological change unambiguously lowering real wage of the middle skilled workers despite their productivities improving, finite changes can eventually raise their real wage. But, the distribution of wage-incomes changing in favour of the high-skilled workers (relative to the middle-skilled workers) due to AI-driven finite changes will be similar to that due to small technological change, except that the relative gain of the high-skilled workers will smaller in magnitude.

Suggested Citation

  • Rajat Acharyya & Sugata Marjit, 2026. "AI, Task-based Production in General Equilibrium and Distribution of Labour Incomes," CESifo Working Paper Series 12800, CESifo.
    • Handle: RePEc:ces:ceswps:_12800
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    References listed on IDEAS

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    1. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The Skill Content of Recent Technological Change: An Empirical Exploration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(4), pages 1279-1333.
    2. 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.
    3. Jones, Ronald W., 2008. "Key international trade theorems and large shocks," International Review of Economics & Finance, Elsevier, vol. 17(1), pages 103-112.
    4. Jones, R.W. & Marjit, S., 1992. "International Trade and Endogenous Production Structures," RCER Working Papers 312, University of Rochester - Center for Economic Research (RCER).
    5. repec:bla:econom:v:54:y:1987:i:214:p:173-84 is not listed on IDEAS
    6. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2016. "Competitive General Equilibrium with Finite Change and Theory of Policy Making," Economics and Politics, Wiley Blackwell, vol. 28(1), pages 1-7, March.
    7. David H. Autor & Frank Levy & Richard J. Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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