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The AI Economy: Adoption, Human Validation, and Labor Demand

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  • Alemán-Pericón, Christian

Abstract

I study how human validation requirements shape the response of wages and labor demand to AI adoption. I introduce fixed, recurring validation labor into a general equilibrium task model with endogenous AI adoption. It features a validation threshold determining whether the labor created by AI adoption offsets the productive labor it displaces after accounting for demand expansions. I estimate the model using U.S. occupation-task data on human versus AI involvement at work, and AI adoption rates. The estimated U.S. validation requirement lies below the threshold, implying that productive labor displacement dominates and wages fall. For the occupations in the estimation sample, a ten year projection of declining AI costs raises adoption from 18 to 62 percent and nearly triples output, while reducing employment by 13 percent and wages by 43 percent. Extending the exercise to the entire U.S. economy attenuates the employment and wage declines to 5 and 18 percent, respectively.

Suggested Citation

  • Alemán-Pericón, Christian, 2026. "The AI Economy: Adoption, Human Validation, and Labor Demand," EconStor Preprints 343972, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:343972
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    Keywords

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    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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