Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299900 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 16972
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
How will the emergence of ChatGPT and other forms of artificial intelligence (AI) affect the skill premium? To address this question, we propose a nested constant elasticity of substitution production function that distinguishes among three types of capital: traditional physical capital (machines, assembly lines), industrial robots, and AI. Following the literature, we assume that 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.
Subjects: 
automation
artificial intelligence
ChatGPT
skill premium
wages
productivity
JEL: 
J30
O14
O15
O33
Document Type: 
Working Paper

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