At least I've learned a lot from writing this paper.

Colleagues have also recommended its pedagogical qualities, so hopefully it's insightful for others as well.

Thanks for reading.🙏

Granted, the ideas in our analysis are not novel.

In my view, our contribution lies in integrating these fundamental forces on the labor demand and labor supply side in an elegant, concise, and transparent framework.

Example: administrative assistants may be displaced from their job due to AI. Whether that affects their eventual wage outcomes, depends on how transferable their skills are to other jobs.

Second, the reallocation elasticity (kappa) regulates the magnitude of the wage changes.

When labor reallocation is very elastic, differences in equilibrium wage changes are small.

When labor reallocation is inelastic, we get the highest possible wage differences.

Example: AI may take over (some) coding tasks, but demand for programmers may still increase if the increase in overall demand for IT services offsets the decline in programmer demand for a given IT output.