A new study by Stanford University economist Lukas Altgoff indicates that artificial intelligence is unlikely to replace most professions but will transform the nature of work, boost wages, and help reduce pay inequality. According to the researcher’s forecast, low-skilled workers stand to benefit the most from these changes.
Altgoff explains that AI will simplify many work tasks. By lowering the skill level required to perform these tasks, it will enable less skilled workers to take on more complex and better-paying roles. His estimates suggest that over their lifetimes, these workers could earn between 15% and 45% more than they would without AI. If technological advancements occur more rapidly, this impact could be even greater.
If this forecast holds true, AI could help narrow the pay gap between the highest and lowest earners. Currently, this gap is widening, and many experts worry that the rise of artificial intelligence will exacerbate inequality.
A new concept of the impact of technologies
Altgoff’s analysis, published as a working paper by the National Bureau of Economic Research, is based on a new concept he developed with Hugo Reichardt from the Barcelona School of Economics. This approach provides fresh insights into how technological changes affect workers.
Unlike previous models that primarily focused on automation (where machines fully replace humans) or augmentation (where technology helps people work more efficiently), Altgoff and Reichardt highlight the key outcome of technological development as “simplification.” While all workers will benefit, the most significant gains will be seen among less skilled workers, whose incomes are expected to grow faster. Other studies also indicate that AI enables these workers to increase productivity more rapidly than their highly skilled counterparts.
Altgoff points out that signs of this leveling are already emerging in the labor market. He cites the rise in the number of solo entrepreneurs in the USA and the recent case of an 18-year-old student from California who received an unofficial job offer from NASA after discovering 1.5 million previously unknown space objects while working on his laptop. “Our research emphasizes a more optimistic scenario for the impact of AI on inequality in the labor market,” Altgoff said.
According to the researcher, his work differs from many others by analyzing not only the professions most at risk due to AI development. He notes that the consequences for workers depend on whether the technology automates, accelerates, or simplifies specific tasks.
“Our paper transforms these now-standard measurements of AI’s impact into a forecast of the consequences for wages and employment for each individual in the economy, considering their strengths and weaknesses, ability to acquire new skills, transition to other professions, and macroeconomic changes, including demand for goods and services,” Altgoff explained. He believes this allows for “more substantiated predictions about the AI economy.”
Impact on higher education and the labor market
Using their concept, Altgoff and Reichardt also concluded that low-skilled workers are slower to adopt AI, but this does not diminish the technology’s positive effects. Meanwhile, the overall value of professional skills is expected to gradually decline, which may reduce interest in pursuing higher education.
The authors predict that technical and engineering fields will have better prospects in the labor market compared to areas where linguistic and social skills are paramount. Specifically, mechanics, engineering, architecture, physics, transportation specialties, and culinary arts may see increased demand, while humanities disciplines, including political science, sociology, philosophy, law, and religious studies, may lose some of their appeal.
Source: Phys.org
