--- title: "Practice Makes Perfect: Tacit Knowledge, Generative AI, and Returns to Schooling and Experience · AI Fault Line" url: https://aifaultline.com/research/p/title-6d11e1693e4be833/ description: "AI Fault Line is a neutral, evidence-cited field guide to why experts looking at the same developments disagree about AI's effect on productivity, jobs, inequality, regulation and the pace of change." --- [Research](https://aifaultline.com/research/) # Practice Makes Perfect: Tacit Knowledge, Generative AI, and Returns to Schooling and Experience Eduardo Levy Yeyati, Darío Judzik, Juan Ignacio Barbiero · arXiv · 26 Oct 2026 [Read original source](https://arxiv.org/abs/2610.36008v1) Open access Where this sits in the debate - [Will AI destroy more jobs than it creates?](https://aifaultline.com/debate/jobs/) - [Will AI widen inequality?](https://aifaultline.com/debate/inequality/) · its finding: it depends ([why studies differ](https://aifaultline.com/debate/inequality/#why)) Direction of the finding as read from the abstract by an AI model ([AI-written](https://aifaultline.com/about/)). ## Abstract Generative AI changes the scarcity of different forms of human capital. It makes codified knowledge cheaply available at the point of production, while judgment acquired through practice remains tied more closely to the worker. We ask what this does to two familiar prices in the wage structure: the return to schooling and the return to experience. In a short-run framework, machine-supplied codified knowledge substitutes directly for the codified component of worker human capital, lowering the schooling gradient. If codified and practice-based knowledge are complements, the return to experience rises where learning through practice is fastest; technology-specific experience can also become obsolete, rotating the experience profile rather than shifting it uniformly. Using US Current Population Survey earnings data from 2018 through June 2026, we compare occupations in the top and bottom quartiles of the pre-ChatGPT Felten-Raj-Seamans exposure index. After the public release of ChatGPT, the return to a year of schooling falls by 0.55 log points in exposed occupations. The return to a year of experience rises by 0.26 log points at three years of potential experience, is unchanged at fifteen, and falls by 0.12 log points at twenty-five; under the baseline quadratic, the effect crosses zero at 18.1 years. These breaks appear with the release, disappear under a pandemic placebo, survive a common censoring rule across the full sample, and remain when each occupation is allowed its own pre-shock schooling and experience gradients. The pattern is a repricing of human capital inside exposed occupations: codifiable knowledge becomes less scarce, while the value of experience depends increasingly on whether it transfers to the new technology. ## About this publication **Preprint.** A preprint — posted publicly before or without journal peer review; findings may still be revised. Published 2026 (recently) Citations Not recorded for this source Citation counts come from OpenAlex; none are recorded for this source — absence of a count is not absence of citations. [Chart: published 2026] ## More on this topic Related by theme, not necessarily by method or conclusion. - [The Effects of Generative AI on High Skilled Work: Evidence from Three Field Experiments with Software Developers](https://aifaultline.com/research/p/doi-10-2139-ssrn-4945566/) SSRN · 2024 - [GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models](https://aifaultline.com/research/p/doi-10-48550-arxiv-2303-10130/) arXiv · 2023 - [Experimental evidence on the productivity effects of generative artificial intelligence](https://aifaultline.com/research/p/doi-10-1126-science-adh2586/) Science · 2023 - [The simple macroeconomics of AI](https://aifaultline.com/research/p/doi-10-1093-epolic-eiae042/) Economic Policy · 2024 Overview assembled automatically from collected metadata. [How this site is built](https://aifaultline.com/about/).