IMF Working Papers

AI Adoption and Inequality

By Emma J Rockall, Marina Mendes Tavares, Carlo Pizzinelli

April 4, 2025

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Format: Chicago

Emma J Rockall, Marina Mendes Tavares, and Carlo Pizzinelli. "AI Adoption and Inequality", IMF Working Papers 2025, 068 (2025), accessed May 20, 2025, https://doi.org/10.5089/9798229006828.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

There are competing narratives about artificial intelligence’s impact on inequality. Some argue AI will exacerbate economic disparities, while others suggest it could reduce inequality by primarily disrupting high-income jobs. Using household microdata and a calibrated task-based model, we show these narratives reflect different channels through which AI affects the economy. Unlike previous waves of automation that increased both wage and wealth inequality, AI could reduce wage inequality through the displacement of high-income workers. However, two factors may counter this effect: these workers’ tasks appear highly complementary with AI, potentially increasing their productivity, and they are better positioned to benefit from higher capital returns. When firms can choose how much AI to adopt, the wealth inequality effect is particularly pronounced, as the potential cost savings from automating high-wage tasks drive significantly higher adoption rates. Models that ignore this adoption decision risk understating the trade-off policymakers face between inequality and efficiency.

Subject: Income, Income inequality, Labor, National accounts, Technological innovation, Technology, Wages

Keywords: Adoption rate, AI adoption, Artificial intelligence, Decision risk, Employment, IMF working paper research Department, Income, Income inequality, Inequality, Tasks drive, Technological innovation, Wages

Publication Details

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