Abstract

We are living through a revolutionary period, where AI technology is taking over almost every aspect of human civilisation. As with any revolution there are advantages and disadvantages associated with AI and automated technologies. In this essay we will explore AI’s direct impact on people, whether the continuous evolution of AI exacerbate or reduce income inequality.

To do this, two theories will be considered. The first theory being Automation and Job Polarization Theory which states that automation, including AI, leads to job polarization by creating a demand for high-skilled, high-paying jobs and it displaces low-skilled, routine jobs. As a result, the middle class will begin to shrink and the gap between high-income and low-income workers will increase further. The second theory is called Schumpeter’s Creative Destruction Theory which explains how innovation and technical progress lead to the destruction of old industries and the creation of new ones. Which means that it could potentially reduce income inequality. Though it is an optimistic view on events, what is evident is that the implementation of AI could exacerbate income inequality.

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