AI-driven capital-skill complementarity: Implications for skill premiums and labor mobility

Shuo Wang, Yuzhang Wang and Chengyou Li

Finance Research Letters, 2024, vol. 68, issue C

Abstract: To explain the newly discovered coevolution of capital and labor structures, this study presents a modified capital-skill complementarity hypothesis within the framework of structural transformation. We propose that artificial intelligence (AI) and skilled labor exhibit relative complementarity. Specifically, advancements in AI services or AI-enhanced technologies incentivize the mobilization of skilled labor across different industry sectors. The direction of this labor movement is contingent upon variations across industry sectors, including AI output elasticity and the substitutability between AI and conventional production methods. This structural transformation process also induces fluctuations in skill premiums.

Keywords: Artificial intelligence; Capital-skill complementarity; Skill premiums; Structural change (search for similar items in EconPapers)
JEL-codes: J24 L25 O33 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:68:y:2024:i:c:s1544612324010742

DOI: 10.1016/j.frl.2024.106044

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