Published on Jobs and Development

What we’re reading about the age of AI, jobs, and inequality

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AI has prompted concerns about job displacement and income insecurity. Copyright: Arne Hoel/World Bank

Anxieties about job displacement and income insecurity in the age of artificial intelligence (AI) are widespread. History provides reassurance that such concerns are not novel. From the Industrial Revolution to the current age of AI, each wave of technological advancement has reshaped the workplace, prompting concerns about job displacement with machines replacing human labor.

At the Bletchley Park AI summit in 2023, Elon Musk famously forecast a future where AI will render all jobs obsolete, leading to a paradigm of abundance without scarcity of goods and services. Such prophecies echo sentiments from as early as 1930s when John Maynard Keynes spoke of "technological unemployment," a phenomenon where the pace of technological innovation outstrips the creation of new jobs.

Debate on technological unemployment

The debate on technological unemployment among economists has been long-standing and intense.:

Will AI-driven transformation be similar or different from earlier economic transformations?

AI has been around for decades, although the hype has peaked and waned. Backed by the exponential global diffusion of mobile devices and the internet – yet persistent and gendered digital divide -- one conjecture is that the impacts might be more dramatic than expected in developing contexts such as in Africa, Asia, and for rural and remote communities. Emerging markets and low-income countries are less well prepared to leverage AI, which could exacerbate the digital divide and cross-country income disparities.

Cross-country studies of labor market exposure to AI reveal that advanced countries face a higher risk due to the prevalence of cognitive-task-oriented jobs; but they are also better positioned to exploit the benefits of AI compared to emerging market and developing economies. Women and highly educated workers also face greater exposure, with high potential complementarity.

The 2016 World Development Report showed for the first time that the labor market is hollowing out in developing countries as well, with low skilled jobs facing increasing competition and declining wages, disproportionally held by the least educated and the bottom 40 percent of the income distribution. The biggest risks may not be massive unemployment but widening inequality, risks of exclusion, and harms. Fei Fei Li, professor of Computer Science and Director of the Stanford Institute for Human-Centered AI, advocates for keeping humanity at the forefront of this technological revolution. Timnit Gebru, a former student of Li’s, emphasizes the need for institutional and structural changes to ensure Ethical AI.

AI’s trajectory is not predetermined, and it can develop in very different directions

The future that emerges will be a consequence of policy choices made today. Carefully calibrated policies should not only foster skill development but also facilitate the adaptive capacity of the workforce to navigate this evolving landscape. Investment in education and alternative skill development formats becomes paramount to use human capital to its full potential. A critical reexamination of the social contract and the hard social choices of income distribution will likely come into play. Social protection systems will need to adapt to support the vulnerable, including job displacement, ensuring economic inclusion in the digital economy and age of AI.

History has afforded rich lessons for humanity in building resilience in the face of technological change. By embracing ethical considerations, proactive policy interventions, and investing in human capital, we can navigate the age of AI while reducing poverty and inequality, fostering inclusion, and boosting shared prosperity for all.

Featured studies on economic policy considerations in the age of AI:

Other essential readings on AI and inequality

Featured book


This blog is based on the April 2024 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.


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Tina George Karippacheril

Sr. Social Protection Specialist

Asbath Alassani

Development Economist and Consultant

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