Peter Isztin on the incidence of AI

This short paper considers the effects of artificial intelligence (AI) tools on the division of labor across tasks. Following Becker and Murphy (1992) I posit a “team” with each team member being assigned to a task. The division of labor (that is, the number of specialized tasks) is here limited not only by the extent of the market, but by coordination costs. Coordination costs stem from the need for knowledge in multiple tasks, as well as from monitoring and punishing shirking and other malfeasance. The introduction of AI in this model helps the coordination of the team and fully or partially substitute for human “generalist” knowledge. This in turn can make specialization wider, resulting in a greater number of specialized fields. The introduction of AI technologies also increases the return to fully general knowledge (i.e.education).

Not a certainty, but definitely worth a ponder.  Here is the draft.