Antonio Minniti , Klaus Prettner , Francesco Venturini
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AI innovation and the labor share in European regions
This paper examines how the development of Artificial Intelligence (AI) affects the distribution of income between capital and labor, and how these shifts contribute to regional income inequality. To investigate this issue, we analyze data from European regions dating back to 2000. We find that for every doubling of regional AI innovation, the labor share declines by 0.5% to 1.6%, potentially reducing it by 0.09 to 0.31 percentage points from an average of 52%, solely due to AI. This new technology has a particularly negative impact on high- and medium-skill workers, primarily through wage compression, while for low-skill workers, employment expansion induced by AI mildly offsets the associated wage decline. The effect of AI is not driven by other factors influencing regional development in Europe or by the concentration of the AI market.
期刊介绍:
The European Economic Review (EER) started publishing in 1969 as the first research journal specifically aiming to contribute to the development and application of economics as a science in Europe. As a broad-based professional and international journal, the EER welcomes submissions of applied and theoretical research papers in all fields of economics. The aim of the EER is to contribute to the development of the science of economics and its applications, as well as to improve communication between academic researchers, teachers and policy makers across the European continent and beyond.