NEW WORKING PAPER: How will the emergence of ChatGPT and other forms of artificial intelligence (AI) affect the skill premium? To address this question, we propose a nested constant elasticity of substitution production function that distinguishes among three types of capital: traditional physical capital (machines, assembly lines), industrial robots, and AI. Following the literature, we assume that industrial robots predominantly substitute for low-skill workers, whereas AI mainly helps to perform the tasks of high-skill workers. We show that AI reduces the skill premium as long as it is more substitutable for high-skill workers than low-skill workers are for high-skill workers.
You are welcome to download, share, or comment on the following working paper:
- David E. Bloom, Klaus Prettner, Jamel Saadaoui, Mario Veruete (2024). Artificial Intelligence and the Skill Premium, IZA Discussion Paper No. 16972, https://www.iza.org/publications/dp/16972/artificial-intelligence-and-the-skill-premium
