Job Transformation, Specialization, and the Labor Market Effects of AI

Lukas Freund () and Lukas Mann ()
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Lukas Freund: Boston College
Lukas Mann: Arizona State University

No 18565, IZA Discussion Papers from IZA Network @ LISER

Abstract: A central effect of automation is to transform jobs - shifting their task content. We develop a general-equilibrium model of this process. Occupations bundle tasks; workers possess task-specific skills and sort by comparative advantage. When a task is automated, remaining tasks gain in importance, so wage effects depend on workers' full skill profiles. We estimate the distribution of task-specific skills and project individual-level wage effects of generative AI automation. Moderate exposure benefits workers on average but high exposure harms them, with large dispersion within occupations; the return to social skills rises, that to analytical skills falls; and low-earners gain more than high-earners. Job transformation drives these results.

Keywords: AI; bundling; labor markets; skills; task model (search for similar items in EconPapers)
JEL-codes: E24 J23 J24 J31 O33 (search for similar items in EconPapers)
Date: 2026-04
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