AI raises average wages by 21% and substantially reduces' wage inequality, researchers find

Core Insights - Artificial intelligence significantly reduces wage inequality while increasing average wages by 21 percent, as stated in a new working paper by researchers from Stanford University and the Barcelona School of Economics [1][4][5] Group 1: Impact on Wage Inequality - AI's equalizing effect is primarily driven by simplification, which allows workers of varying skill levels to compete for the same jobs [5][7] - The simplification brought on by AI enhances the relative productivity of lower-skill workers in tasks previously dominated by higher-skilled workers, thereby reducing skill-based barriers [7] Group 2: Welfare Gains - AI generates substantial welfare gains for nearly all workers entering the labor market, with estimated improvements equivalent to permanent wage gains of 26–34% for most workers [8] Group 3: Occupational Landscape Changes - AI significantly alters the occupational landscape, leading to a large reallocation of employment across different occupations [10] - Certain occupations, such as administrative roles, experience a notable decline in employment, while science-related occupations see growth [10] - Although average wages rise, some specific occupations, including architects, engineers, and executives, may face absolute wage declines [10]