Technology Category
Philosophy and Ethics of AI: AI & Jobs/LaborHumans and AI: Other Foundations of Human Computation & AIIntelligent Robots: Cognitive Robotics
Workers' Incentives and the Optimal Taxation of AI
🤖 AI Summary
This study addresses the labor market distortions arising from artificial intelligence (AI) displacing human cognitive labor by developing a dynamic optimal taxation model that incorporates physical and cognitive labor, physical capital, and AI as a taxable factor of production within a general equilibrium framework. Building on the dynamic public finance model of Slavik and Yazici (2014) and employing optimal control theory, the analysis reveals that the optimal time to tax AI occurs when its capabilities advance sufficiently to substitute for cognitive tasks, thereby inducing cognitive workers to shift into physical occupations. Taxing AI at this threshold mitigates labor market inefficiencies caused by such reallocation, offering a theoretically grounded rationale for designing tax policy in the age of AI.
Technology Category
Application Category
📝 Abstract
We characterize the optimal tax policy in an economy with human manual and cognitive labor, physical capital, and artificial intelligence (AI). Extending the dynamic taxation setup of Slavik and Yazici (2014), we find that it is optimal to start taxing AI when cognitive workers start to consider switching to manual jobs. This threshold may be crossed once AI becomes sufficiently capable in substituting humans across cognitive tasks.
Problem
Research questions and friction points this paper is trying to address.
optimal taxation
artificial intelligence
cognitive labor
manual labor
workers' incentives
Innovation
Methods, ideas, or system contributions that make the work stand out.
optimal taxation
artificial intelligence
cognitive labor
labor substitution
dynamic taxation
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