Tariffs, taxes and wages in the age of artificial intelligence
Abstract
Abstract We formulate a model of an open economy with three final goods sectors, one of which uses a continuum of tasks as inputs. Skilled labor or artificial intelligence (AI), which is produced using skilled labor and capital, can conduct these tasks. We explore the effects of technical progress in AI, showing how AI competes with skilled labor in tasks and the consequences for wage inequality and the skill premium. We consider the effectiveness of trade tariffs and a direct AI tax to counter negative impacts of advancements in AI technology on the range of tasks performed by skilled labor.
Fields of Study & Subjects
Economic and Technological Innovation
Labor market dynamics and wage inequality
Digital Economy and Work Transformation
Publication details
- Journal / source
- Economic Inquiry
- Publisher
- Wiley
- Volume
- 64
- Issue
- 2
- Pages
- 395–408
- Publication date
- 4 February 2026
- Language
- EN