Analyzing wealth distribution effects of artificial intelligence: A dynamic stochastic general equilibrium approach

Abstract

This study explores the often-overlooked influence of artificial intelligence (AI) on wealth distribution. Using a continuous-time heterogeneous agent dynamic general equilibrium model, we investigate AI's impact on production technology as a form of biased technological progress. Our findings highlight a temporal dichotomy in AI's effects on wealth inequality: in the short term, AI exacerbates disparities in wealth distribution, while the long-term outcomes depend on the extent of AI's influence across different technological domains. The nuanced nature of AI-driven technological progress leads to distinct consequences for the rate of return on capital—showing short-term increases across all forms of technological progress, but with varying long-term effects. Based on these results, we propose policy recommendations for China to leverage AI for economic growth while mitigating inequality. This research provides a comprehensive analysis of AI's role in wealth distribution, offering valuable insights for both academic inquiry and policy formulation.

Keywords

• JEL
• E12
• E13