Artificial Intelligence and the Rents of Finance Workers

Jean-Edouard Colliard and Junli Zhao

No 20460, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies how artificial intelligence (AI) affects the finance labor market when humans and AI perform different tasks in investment projects, and workers earn agency rents that grow with project size. We identify two key effects of AI improvement: A freeriding effect raises worker rents by increasing the probability of successful investment when the worker shirks; A capital reallocation effect shifts investment toward workers with higher or lower rents, depending on which tasks AI improves. Contrary to standard predictions, AI can raise both worker rents and labor demand. We derive implications for capital allocation, labor demand, compensation, and welfare.

Keywords: Artificial intelligence; Labor markets; Automation (search for similar items in EconPapers)
JEL-codes: D21 G20 O33 (search for similar items in EconPapers)
Date: 2025-07
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