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Artificial intelligence, services globalisation and income inequality

Author

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  • Giulio Cornelli
  • Jon Frost
  • Saurabh Mishra

Abstract

How does economic activity related to artificial intelligence (AI) impact the income of various groups in an economy? This study, using a panel of 86 countries over 2010–19, finds that investment in AI is associated with higher income inequality. In particular, AI investment is tied to higher real incomes and income shares for households in the top decile, while households in the fifth and bottom decile see a decline in their income shares. We also find a positive association with exports of modern services linked to AI. In labour markets, there is a contraction in overall employment, a shift from mid-skill to high-skill managerial roles and a reduced labour share of income.

Suggested Citation

  • Giulio Cornelli & Jon Frost & Saurabh Mishra, 2023. "Artificial intelligence, services globalisation and income inequality," BIS Working Papers 1135, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1135
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    References listed on IDEAS

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    More about this item

    Keywords

    artificial intelligence; automation; services; structural shifts; inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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