Weak bundle, strong bundle: how AI redraws job boundaries

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Speaker: Professor Luis Garicano, School of Public Policy, The London School of Economics

About the seminar topic

This paper studies how the effect of AI on an occupation depends not just on which tasks AI can perform but also on how costly it is to unbundle those tasks from the job. Much of the discussion of AI and labor markets starts from task exposure: if AI can perform more tasks in an occupation, that occupation should lose employment or earnings. This is incomplete because labor markets price jobs, not tasks. Jobs bundle tasks together, and the effect of AI depends on how costly it is to break the bundle. We build a two-task model in which AI can either assist one task inside a bundled job or supply that task autonomously while a human supplies the residual task. We show that, in weak-bundle occupations, AI automates some tasks and narrows the boundary of the job, activating the standard task-substitution channel once product demand is sufficiently inelastic. In strong-bundle occupations where tasks are not independently reallocable, AI improves performance inside the job, but does not remove the human from the bundle. Thus, bundling provides a force that protects jobs and workers’ share of downstream revenue.

Speaker bio

Luis Garicano is Professor of Public Policy at the London School of Economics and Political Science (LSE). His research examines the organisation of knowledge, talent and specialisation, and their impact on productivity and economic growth, with a particular focus on how artificial intelligence is transforming the economics of work.

Alongside his academic research, Garicano has made significant contributions to public policy and European economic governance. He returned to academia in 2022 after serving as a Member of the European Parliament, where he was Vice-President of the Renew Europe group responsible for economic affairs.

Before entering politics, Garicano held academic appointments at the University of Chicago Booth School of Business and LSE. He is also co-founder of Silicon Continent, a platform exploring innovation, technology, AI and policy in Europe.

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