The AI-Becker Problem

Luis Garicano, an economist at the London School of Economics, has formalized the structural challenge AI poses to Becker's human capital framework as the AI-Becker problem. In Becker's original analysis, firms underinvest in general training because of poaching: if a firm trains a worker in portable skills, a competitor can hire the trained worker away, capturing the return without bearing the cost. The market solves this through bundling — entry-level workers are paid less than their productivity warrants, and the difference constitutes an implicit tuition payment the firm recoups before the worker moves on. The apprentice generates value while learning. The firm profits from the bundled arrangement. The worker acquires capital. AI shatters the bundle. When entry-level tasks can be performed by machines, the junior worker no longer generates the revenue that subsidized her training.