The Political Economy of Artificial Intelligence: Evidence from Western Europe

While advances in artificial intelligence (AI) are feared to bring about widespread job losses, workers who are highly exposed to the technology tend to anticipate productivity-driven improvements in their earnings and employment prospects. I argue that this paradox has important political economy implications: if wage gains from labor complementarities are expected to exceed losses from substitution effects, exposure to AI is more likely to weaken than strengthen support for redistributive policies and their political advocates. I test this argument using a combination of observational and experimental data from Western Europe, finding that occupational exposure to AI is negatively associated with support for redistribution, the left, and the (increasingly pro-welfare) populist right but positively associated with support for the mainstream right. The results enhance our understanding of the political economy of digitalization, suggesting a discrepancy between the perceived distributional consequences of AI and earlier automation technologies that have primarily displaced labor.