The Implementation of AI Will Affect the Gap Between the Poor and the Rich

With the increasing share of artificial intelligence in the 21st century economy, debates about its possible consequences for income and wealth distribution are growing. An article published in the journal Heliyon shows that while AI-based automation may exacerbate wealth inequality, there are also factors that can mitigate these differences.

Researchers from Changzhou and Shenzhen Universities (China) concluded that the advancement of AI technologies contributes to economic growth and overall improvement in society's welfare.

"AI will become a new catalyst for economic growth in China, bringing new life to the economy," they note.

The model developed by scientists takes into account both the labor market and the capital market. The calculations consider people's ability to earn throughout their lives, as well as the random nature of mortality.

The study showed that AI-based automation contributes to economic growth, but also increases income inequality, especially between income from labor and capital. Productivity improvements will trigger growth in wages and interest rates. The latter will be driven by increased demand from businesses seeking to incorporate AI into their work processes, and companies creating increasingly sophisticated AI. Wages are growing, but not as fast as capital returns, with the latter having a disproportionate increase in efficiency.

The study authors note that "Hicks-neutral" technologies and innovations can smooth out gaps in wealth distribution. The concept, first introduced in 1932 by economist John Hicks, implies that "neutral" would be any technological changes that do not affect the balance of labor and capital in the quantities of physical inputs and outputs of goods. For example, Hicks-neutral changes in a factory's production process would be those that increase the efficiency of labor and machines (capital) by the same amount.

Political measures are also proposed, such as redistribution mechanisms, which will help balance economic growth and social justice.