Robots widen wage gaps while AI may narrow them
A working paper from Vienna University of Economics and Business examines how different automation technologies affect wage inequality across 52 countries using historical data. The cross-sectional analysis found that whilst the use of industrial robots has widened wage inequality by displacing lower-skilled workers, artificial intelligence may reduce it by primarily affecting high-skilled roles.
The skill premium—the ratio of high-skilled to low-skilled wages or the relative wage advantage—serves as the study's key measure of inequality. When this ratio is high, university-educated workers earn significantly more than those without degrees.
Using a model calibrated to 2019 data, the researchers conducted counterfactual simulations to predict potential impacts. The effects are strongest in wealthy nations, where both technologies have the most dramatic impact on wage structures.
In the scenarios, if all countries adopted South Korea's robot density, the wage gap between skilled and unskilled workers would increase by an average of 187%. Conversely, if countries matched US levels of AI investment, this wage gap would shrink by 28%.
The research demonstrates that both technologies boost economic growth—robot adoption could raise GDP per worker by 261% and AI investment by 31% in these simulated scenarios—but with different implications for wage inequality depending on a country's income level and who benefits economically.