In my first SUERF policy brief, written with David Bloom, Klaus Prettner, and Mario Veruete, you will learn about how AI may affect the wage skill premium:
We propose a general production function framework that incorporates automation in terms of both industrial robots and AI as separate production factors. When simulating the evolution of the skill premium using standard parameter values on the substitutability among different types of capital and labor, we find that the increasing use of AI reduces the skill premium. Thus, AI has the potential to mitigate or even reverse increases in the skill premium that have been observed in the US in the 1980s and 1990s and may be a potential explanation for why the skill premium has not increased as fast in the 2000s and 2010s as it did in the preceding two decades.
Overall, however, our contribution has only focused on wage inequality. It may well be that AI raises inequality in capital income because the expensive training of AI models implies that widespread ownership is not to be expected. This type of inequality needs to be a key focus of policymakers as they seek to understand and guide the future use of AI.
You can find the NBER version, the abstract, the keywords and the online appendix in an older post:
