Abstract
Artificial intelligence (AI) is rapidly transforming industries, boosting productivity and innovation, but it is also worsening income inequality. This essay examines how AI disproportionately benefits high-skill workers while displacing low-skill labor through automation, leading to a growing economic divide. High-skill workers enjoy rising wages and job security, while low-skill workers face job losses and stagnant incomes. Drawing on historical parallels with the Industrial Revolution, the essay explores AI’s potential to cause widespread “technological unemployment,” even in white-collar professions. A research approach using synthetic control methods, instrumental variables, and machine learning is proposed to assess AI’s impact on income inequality. The essay also discusses Universal Basic Income (UBI) as a potential solution to mitigate job displacement caused by AI. UBI could offer financial stability and reduce inequality, but it presents challenges in funding and implementation. The conclusion underscores that without targeted policies, AI’s ongoing development will likely exacerbate income inequality, making equitable distribution of its benefits crucial.
Keywords: AI, Income Inequality, Job Displacement, UBI
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