Janus-Faced Technological Progress and the Arms Race in the Education of Humans and Chatbots

Wolfgang Kuhle

Papers from arXiv.org

Abstract: We study the conditions under which technological advances, in combination with a lognormal wage distribution, incentivize agents into an inefficient educational arms race. Our model emphasizes that lognormal wage distributions imply that agents' wages increase exponentially in the level of their skill as well as in the level of technology. In turn, this exponential relation between skills, technology, and wages pressures agents into an exhausting race for the tails of the economy's skill distribution. Moreover, technological advances and overinvestment in education increase GDP and inequality, while welfare may decline. In an alternative interpretation, our model studies firms that invest in artificial intelligence of their chatbots and AI agents. For a wide range of specifications, firms, just like humans, have an incentive to choose corner solutions where investment is limited only by borrowing constraints.

Date: 2026-02
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2602.19783 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2602.19783

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().