Three papers to be presented on September 25 at the Brookings Papers on Economic Activity (BPEA) fall conference examine potential risks and rewards of the boom in artificial intelligence (AI): Why is AI so contentious, The vanishing advantage of specialization, and Financing the AI buildout.
The vanishing advantage of specialization: AI, knowledge utilization, and the boundary of the firm predicts that AI will encourage companies to rely much less on outside experts. For instance, a company that now would hire a law firm to advise it on a pending merger or a marketing firm to help it launch a new product might in the future do the work in-house, assisted by AI. That’s because AI tools make the hard-won knowledge of experts more readily accessible to non-experts.
“Specialists … can spread the fixed cost of acquiring knowledge across many clients,” writes the author, Luis Garicano of the London School of Economics. “Artificial intelligence reduces the fixed cost and hence benefits those who use this knowledge less often.”
His paper lists six occupations, employing 5.9 million people, that could be more or less affected, depending on whether they work in specialized outside firms: lawyers, accountants, software developers, market researchers, management analysts, and graphic designers.
In four of the occupations—lawyers, accountants, software developers, and management analysts, the share of workers employed by specialized firms fell faster between 2022 and 2025 than before the advent of AI.
Preliminary evidence is consistent with the trend: 43.5% of a sample of work-related ChatGPT messages concerned tasks associated with another occupation. (A lawyer might ask a marketing question or a marketer a legal question, for example). Corporate legal departments report large increases in AI use and say they expect to rely less on outside advisers. And, after ChatGPT’s release, freelance writers and editors experienced fewer jobs and lower earnings.
AI will reduce but not eliminate outsourced work, Garicano notes. Specialized outside firms will concentrate on harder, rarer problems.
In an interview with the Brookings Institution, he warned this development could create a “broken ladder” by eliminating less-complex jobs in outside firms that have traditionally been training grounds for recent graduates. He said educational institutions should adapt by providing more comprehensive training.
He also said decreased outsourcing raises the question of whether liability and licensing regulations that require, for instance, a lawyer to sign a legal opinion or an accountant to sign an audit, should be relaxed or toughened.