Artificial intelligence and the skill premium

Bloom David E., Klaus Prettner, Jamel Saadaoui, Mario Veruete

Publication: Working/Discussion PaperWU Working Paper

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Abstract

What will likely be the effect of the emergence of ChatGPT and other forms of artificial intelligence (AI) on the skill premium? To address this question, we develop a nested constant elasticity of substitution production function that distinguishes between industrial robots and AI. Industrial robots predominantly substitute for low-skill workers, whereas AI mainly helps to perform the tasks of high-skill workers. We show that AI reduces the skill premium as long as it is more substitutable for high-skill workers than low-skill workers are for high-skill workers.
Original languageEnglish
PublisherWU Vienna University of Economics and Business
DOIs
Publication statusPublished - Dec 2023

Publication series

SeriesDepartment of Economics Working Paper Series
Number353

WU Working Paper Series

  • Department of Economics Working Paper Series

Keywords

  • Automation
  • Artificial Intelligence
  • ChatGPT
  • Skill Premium
  • Wages
  • Productivity

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