In an analysis published 14 January 2024, the IMF examined the potential impact of AI on the global labour market, noting that while it has the potential to 'jumpstart productivity, boost global growth and raise incomes around the world', it could just as easily 'replace jobs and deepen inequality'; and will 'likely worsen overall inequality' if policymakers do not proactively work to prevent the technology from stoking social tensions.
The IMF said that, unlike labour income inequality, which can decrease in certain scenarios where AI's displacing effect lowers everyone's incomes, capital income and wealth inequality 'always increase' with greater AI adoption, both nationally and globally.
The main reason for the increase in capital income and wealth inequality is that AI leads to labour displacement and an increase in the demand for AI capital, increasing capital returns and asset holdings' value.
Since in the model, as in the data, high income workers hold a large share of assets, they benefit more from the rise in capital returns. As a result, in all scenarios, independent of the impact on labour income, the total income of top earners increases because of capital income gains.
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