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

Author

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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    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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