"Generate" the Future of Work through AI: Empirical Evidence from Online Labor Markets

Generative artificial intelligence (AI) is expected to transform work, but less is known about how firms reorganize labor demand as the technology diffuses. Existing research has largely focused on which occupations are exposed to AI or whether exposed jobs decline. We extend this debate by examining whether firms adjust by changing where they hire, what jobs contain, or both. Using a nationwide dataset of job postings in the United States, covering all sectors of the economy, we construct a dynamic, posting-level measure of generative AI exposure with a two-stage large language model pipeline. The pipeline identifies the tasks described in each posting and classifies the extent to which generative AI can perform or assist them. We then decompose changes in aggregate exposure into two margins: reallocation of demand across jobs and redesign of tasks within jobs. We document three main findings. First, generative AI exposure is dynamic rather than fixed, changing substantially over time. Second, labor demand adjusts through both margins. Hiring reallocation explains the largest share of the aggregate decline in exposure, accounting for 52% on average, while within-job redesign becomes increasingly important, accounting for 39.5%. A complementary Oaxaca-Blinder decomposition shows that shifts in occupational composition account for about 90% of the exposure change attributable to observable job characteristics. Third, adjustment differs across the job ladder. Senior jobs adjust earlier and mainly through reallocation, whereas junior jobs adjust through a broader mix of reallocation, redesign, and their interaction. These findings suggest that labor-market adjustment to generative AI is a process of organizational reconfiguration, in which firms reshape both hiring demand and the task architecture of work.

Emerging agentic marketplaces provide the economic infrastructure for matching and coordinating the large amounts of AI agents used in agentic swarms. Unlike human workers, AI agents can operate on multiple jobs simultaneously, acquire skills rapidly, and labor without wage floors. These differences introduce a new segment of $\textbf{AI labor markets}$, where AI agents interact with each other at a much higher frequency than human markets. Yet we lack frameworks to understand how such markets behave in light of economic forces that shape labor markets, such as adverse selection and reputation dynamics. To explore this, we introduce $\texttt{AI-Work}$, a tractable, simulated gig economy where Large Language Model (LLM) agents compete for jobs, develop skills, and adapt their strategies under uncertainty and competitive pressure. Our experiments examine three domains of capabilities that successful agents possess: $\textbf{metacognition}$ (accurate self-assessment of skills), $\textbf{competitive awareness}$ (modeling rivals and market dynamics), and $\textbf{long-horizon strategic planning}$. Agents with these capabilities consistently achieve higher profits, market share, and stronger adaptation than competing agents. Through $\texttt{AI-Work}$, we hope to provide a foundation to explore the microeconomic properties of AI-only labor markets, and a conceptual framework to study the strategic reasoning capabilities of participating AI agents.

Freelance workers must continually acquire new skills to remain competitive in online labor markets, yet they lack the organizational training, mentorship, and infrastructure available to traditional employees. Generative AI-powered tools like ChatGPT are reshaping market skill demands while also offering new forms of on-demand learning support to meet those demands. Despite growing interest in AI-powered learning tools, little is known about how freelancers actually use these tools to learn, the challenges they encounter, and how generative AI for learning interacts with precarity and competition in platform-based work. We present a mixed-methods study combining a survey and semi-structured interviews with freelance knowledge workers. Grounded in self-directed learning theory, we examine how freelancers integrate generative AI tools into their learning practices. Our findings show that freelancers increasingly rely on generative AI to structure learning and support exploratory skill acquisition, but do not treat it as their primary learning resource due to inconsistency, lack of contextual relevance, and verification overhead. We identify a shift from learning as growth to learning as survival, where upskilling is oriented toward immediate market viability rather than long-term development. We also surface a structural challenge we term invisible competencies, in which workers acquire skills through generative AI tools but lack credible ways to signal or validate these skills in competitive freelance markets. Based on these insights, we offer design recommendations for generative AI-powered learning tools for freelancers.