Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315088 
Year of Publication: 
2024
Series/Report no.: 
Department of Economic Policy Working Paper Series No. 27
Publisher: 
University of Economics in Bratislava, Department of Economic Policy, Bratislava
Abstract: 
We study how the development of Artificial Intelligence (AI) influences the distribution of income between capital and labor and how this, in turn, exacerbates geographic income inequality. To investigate this issue, we first build a theoretical framework and then analyze data from European regions dating back to 2000. We find that for every doubling of regional AI innovation, there is a 0.7% to 1.6% decline in the labor share, which may have decreased by between 0.20 and 0.46 percentage points from a mean of 52% due solely to AI. This new technology is particularly detrimental to high-skill and medium-skill labor. The impact on income distribution is driven by worsening wage and employment conditions for high-skill labor, and by wage compression for medium- and low-skill labor. The effect of AI is not driven by other factors affecting regional development in Europe, nor by the concentration process in the AI market.
Subjects: 
Artificial Intelligence
patenting
labor share
European regions
JEL: 
O31
O32
O34
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.