Gen-AI

Artificial intelligence (AI) has the potential to reshape the global economy, especially in the realm of labor markets. Advanced economies will experience the benefits and pitfalls of AI sooner than emerging market and developing economies, largely because their employment structure is focused on cognitiveintensive roles. There are some consistent patterns concerning AI exposure: women and college-educated individuals are more exposed but also better poised to reap AI benefits, and older workers are potentially less able to adapt to the new technology. Labor income inequality may increase if the complementarity between AI and high-income workers is strong, and capital returns will increase wealth inequality. However, if productivity gains are sufficiently large, income levels could surge for most workers. In this evolving landscape, advanced economies and more developed emerging market economies need to focus on upgrading regulatory frameworks and supporting labor reallocation while safeguarding those adversely affected. Emerging market and developing economies should prioritize the development of digital infrastructure and digital skills.