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Toward a Bad Job Economy: AI Adoption, Agency Costs, and JobDesign
Resources › Working Papers Working Paper This version: April 2026JEL: D86, J41, O33, L23 Abstract We study how AI affects compensation and job design when performance depends on workers’ non-contractible effort. In a principal–agent model with limited liability, AI reduces effort costs but disproportionately lowers the cost of achieving satisfactory performance. This raises the incentive…