NEW PUBLICATION: 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 can find the WP version, the abstract, the keywords and the online appendix in an older post:
You can quote this article as:
Bloom, D. E., Prettner, K., Saadaoui, J., & Veruete, M. (2025). Artificial intelligence and the skill premium. Finance Research Letters, 107401.
