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.
Bio: Jean-Edouard Colliard is Professor of Finance at HEC Paris, which he joined in 2014. He obtained a PhD in Economics in 2012 from the Paris School of Economics. His main research areas are the regulation of financial institutions and the microstructure of financial markets, including topics such as the impact of artificial intelligence, financial transactions taxes, bank capital requirements, or the European Banking Union. Jean-Edouard's research has been published in leading finance and management journals such as the Journal of Finance, the Review of Financial Studies, the Review of Finance, and Management Science. He is an Associate Editor of the journal Management Science.
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