Artificial Intelligence and the Rents of Finance Workers

Jean-Edouard Colliard and Junli Zhao
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Jean-Edouard Colliard: HEC Paris - Finance Department
Junli Zhao: Bayes Business School

No 1576, HEC Research Papers Series from HEC Paris

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 free-riding 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 market; automation; rents in finance (search for similar items in EconPapers)
JEL-codes: O33 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2025-07-08
New Economics Papers: this item is included in nep-ain, nep-mac, nep-ppm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1576

DOI: 10.2139/ssrn.5339402

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