Labor Market Implications of Technological Change

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Suh, Donghyun, Economics - Graduate School of Arts and Sciences, University of Virginia
Korinek, Anton, AS-Economics (ECON), University of Virginia
Young, Eric, AS-Economics (ECON), University of Virginia
Leeper, Eric, AS-Economics (ECON), University of Virginia

The dissertation explores the labor market implications of technological change, with a focus on income inequality and the future impacts of artificial intelligence (AI).
Chapter 1 develops a model of hierarchical production organizations to examine how technological change affects the entire income distribution, particularly at the top. The model shows that if machines can only perform simple tasks, workers’ wages rise more than managers’ wages. However, if machines can perform sufficiently complex tasks, managers’ wages increase while workers’ wages fall, leading to greater income concentration at the top. The chapter also explores the potential equalizing effects of AI systems capable of automating managerial functions.
Chapter 2 introduces an economic framework to evaluate alternative scenarios of technological progress culminating in artificial general intelligence (AGI). The analysis shows that the effects of automation on wages depend on the distribu- tion of task complexity and the race between automation and capital accumulation. Wage growth can be sustained if capital accumulation outpaces automation. However, if all tasks can be automated, wages eventually collapse regardless of the rate of capital accumulation. The chapter also examines several extensions, such as the role of fixed factors, automating technological progress, societal limits on automation, and heterogeneous worker skills.
Chapter 3 studies the constrained inefficiency of capital ac- cumulation in economies with incomplete markets. The chapter develops two-period models to characterize the forces determining the constrained-efficient capital stock under various assumptions on the production function.
Overall, the dissertation provides insights into the complex relationship between technological change, labor markets, and income inequality, while also exploring the potential economic impacts of future developments in AI.

PHD (Doctor of Philosophy)
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