IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp16972.html
   My bibliography  Save this paper

Artificial Intelligence and the Skill Premium

Author

Listed:
  • Bloom, David E.

    (Harvard School of Public Health)

  • Prettner, Klaus

    (Vienna University of Economics and Business)

  • Saadaoui, Jamel

    (Université de Strasbourg)

  • Veruete, Mario

    (Quantum DataLab)

Abstract

How will the emergence of ChatGPT and other forms of artificial intelligence (AI) affect the skill premium? To address this question, we propose a nested constant elasticity of substitution production function that distinguishes among three types of capital: traditional physical capital (machines, assembly lines), industrial robots, and AI. Following the literature, we assume that industrial robots predominantly substitute for low-skill workers, whereas AI mainly helps to perform the tasks of high-skill workers. We show that AI reduces the skill premium as long as it is more substitutable for high-skill workers than low-skill workers are for high-skill workers.

Suggested Citation

  • Bloom, David E. & Prettner, Klaus & Saadaoui, Jamel & Veruete, Mario, 2024. "Artificial Intelligence and the Skill Premium," IZA Discussion Papers 16972, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16972
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp16972.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    automation; artificial intelligence; ChatGPT; skill premium; wages; productivity;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp16972. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.