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Impact of Artificial Intelligence on Occupational Income Inequality in China

Author

Listed:
  • Jing Yuan

    (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China)

  • Yinghui Wang

    (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China)

  • Jinxin Cao

    (School of Statistics, Shandong Technology and Business University, Yantai, Shandong 264005, China)

  • Zongwu Cai

    (Department of Economics, The University of Kansas, Lawrence, KS 66045, USA)

Abstract

Using the Chinese CFPS database, this paper analyzes the impact of AI on occupational income inequality in China by using the Pareto coefficient. The empirical results show that AI has significantly widened the occupational income gap in China in recent years. Also, using results based on the mediation effect test concludes that AI widens the income gap significantly through the upgrading of the industrial structure and technological innovation. Furthermore, the analysis of regional heterogeneity reveals that the impact of AI on occupational income inequality is strongest in the northeastern region, followed by the western region, while the impacts in the central and eastern regions are relatively smaller. Finally, our analysis suggests that China should strengthen the supervision and adjustment mechanism of occupational income, establish a monitoring system for occupational income, and deepen the reform of the income distribution system, among other measures, to narrow the occupational income gap caused by the skill premium.

Suggested Citation

  • Jing Yuan & Yinghui Wang & Jinxin Cao & Zongwu Cai, 2025. "Impact of Artificial Intelligence on Occupational Income Inequality in China," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202504, University of Kansas, Department of Economics, revised Feb 2025.
    • Handle: RePEc:kan:wpaper:202504
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    File URL: https://kuwpaper.ku.edu/2025Papers/202504.pdf
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    References listed on IDEAS

    as
    1. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    2. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    3. Morten Olsen & Joshua Gottlieb & David Hemous & Jeffrey Clemens, 2017. "The Spill-over Effects of Top Income Inequality," 2017 Meeting Papers 332, Society for Economic Dynamics.
    4. Philip Armour & Richard V. Burkhauser & Jeff Larrimore, 2016. "Using The Pareto Distribution To Improve Estimates Of Topcoded Earnings," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1263-1273, April.
    5. Jing Yuan & Teng Ma & Yinghui Wang & Zongwu Cai, 2025. "Measurement and Decomposition Analysis of Occupational Income Inequality in China," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202502, University of Kansas, Department of Economics, revised Jan 2025.
    6. David H. Autor, 2015. "Why Are There Still So Many Jobs? The History and Future of Workplace Automation," Journal of Economic Perspectives, American Economic Association, vol. 29(3), pages 3-30, Summer.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Artificial intelligence; Industrial structure; Mediation analysis; Occupational income inequality; Regional heterogeneity; Technological innovation.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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