Fears of a big rise in “technological unemployment” are misplaced; if anything the net impact on labour demand will ultimately be positive. But the potential for AI to affect a much wider range of sectors than past technologies means there will inevitably be substantial labour market dislocation. And if, as we suspect, AI further increases wages for highly skilled workers and if returns to capital are concentrated among the top technology firms, then income inequality will probably rise and labour’s share of income fall. The impact of AI on inflation is likely to be modest but to the extent that there is any effect it is likely to be to lower inflation in the years immediately following widespread adoption.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services