Influence of AI on labor market polarization and countermeasures
With the decreasing cost of intelligent capital compared to the labor costs of medium-skilled workers,artificial intelligence(AI)is poised to replace jobs in the middle-skilled segment,leading to labor market polarization.This article constructs a dynamic multi-sector general equilibrium model to compare three strategies to cope with this phenomenon:1)improving the labor productivity of medium-skilled workers,2)transitioning medium-skilled workers into low-skilled roles,and 3)upskilling medium-skilled workers into high-skilled positions.Findings reveal that all three strategies can mitigate wage polarization,but transforming medium-skilled workers into high-skilled workers can enhance the overall labor force skill level,reduce income inequality,and promote quality employment and shared prosperity.Automation of high(low)skill tasks will decrease the wages and labor income share of high(low)skilled workers,while the creation of high(low)skill tasks will increase their wages and labor income share.The government increasing the proportion of investment in new infrastructure and reducing the proportion of investment in education can increase total social output,but it will intensify wage polarization.The government increasing the proportion of investment in education and reducing the proportion of investment in new infrastructure will help reduce income inequality,but the economic growth effect will not be as good as Invest in new infrastructure.
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