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

Rajat Acharyya and Sugata Marjit

No 12800, CESifo Working Paper Series from CESifo

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.

Keywords: AI advances; sector-specific Hicks-neutral technical change; finite change; vanishing middle-skill tasks; real wages; wage-inequality (search for similar items in EconPapers)
JEL-codes: F11 F16 O3 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12800

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