“Artificial Intelligence in the Knowledge Economy”, Enrique Ide, Eduard Talamas2023-12-09 (tech economics)⁠:

How does Artificial Intelligence (AI) affect the organization of work? We incorporate AI into an economy where humans endogenously sort into hierarchical firms: Less knowledgeable agents become “workers” (ie. execute routine tasks), while more knowledgeable agents becomes “managers” (ie. specialize in problem solving).

We model AI as an algorithm that uses computing power to mimic the behavior of humans with a given knowledge.

We show that AI not only leads to occupational displacement but also changes the endogenous matching between all workers and managers.

This leads to new insights regarding AI’s effects on productivity, firm size, and degree of decentralization.