Endogenous Task Bundling, Skills and Automation

Joshua Gans

No 35211, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Empirical measures of AI's wage effect typically hold fixed the bundle of activities a worker is paid for at its pre-AI shape. We argue that this assumption hides much of the action. When automation breaks a job apart, firms decide how to recombine the surviving activities; whether they rebundle them into one broad role or split them into specialist roles changes which surviving skills the labour market actually rewards. A skill that played no role in the pre-AI wage can become the dominant component of the post-AI wage, while a skill that anchored the pre-AI wage can disappear from the schedule. We develop an assignment model in which the priced human bundle is endogenous, and we use it to show that a fixed-bundle wage regression can mis-sign the effect of AI exposure. In general, the omitted-redesign bias has no unconditional sign: it is the residual covariance between exposure and role-specific redesign terms. Under explicit sufficient conditions, exposure-correlated unbundling loads specialist comparative-advantage premia onto the exposure coefficient, while exposure-correlated rebundling loads a different, often opposite, omitted term. The sign must therefore be measured from local post-AI partition changes rather than assumed from exposure alone.

JEL-codes: D23 J23 J24 J31 O33 (search for similar items in EconPapers)
Date: 2026-05
Note: PR
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