Multi-Label Topic Assignment via LLM Distillation: A Comparative Analysis of Generative vs. Discriminative Student Models

Sourabh Kasliwal, Shubhranshu Singh

Multi-label topic assignment for user-generated content (UGC) -- including product reviews and buyer-seller conversations -- poses unique scalability challenges in large-scale e-commerce due to informal language, extreme label sparsity, and rapidly evolving taxonomies. While utilizing Large Language Models (LLMs) as labeling oracles to distill ground-truth data has emerged as an industry standard to bypass prohibitive manual annotation costs, determining the optimal, low-latency architecture for the resulting student models remains an open challenge. To address this, we conduct a comprehensive evaluation across Small Language Model (SLM) parameter scales (1B, 4B, and 8B) and architectural paradigms (causal generative versus bidirectional discriminative). Comparing generative text-to-label classifiers against discriminative baselines (DeBERTa-V3 and ModernBERT), our analysis reveals a crucial data-dependent trade-off: while discriminative models outperform ultra-lightweight generative models on structured product reviews, even the smallest 1B generative model surpasses discriminative baselines on complex, multi-turn conversational data. Furthermore, generative models maintain…