Gen-AI: artificial intelligence and the future of work

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 due to their employment structure focused on cognitive-intensive roles. There are some consistent patterns concerning AI exposure, with women and college-educated individuals more exposed but also better poised to reap AI benefits, and older workers 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, while 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 markets need to focus on upgrading regulatory frameworks and supporting labor reallocation, while safeguarding those adversely affected. Emerging market and developing economies should prioritize developing digital infrastructure and digital skills.

To inform the discussion on the potential impact of AI on the future of work and which policies countries should enact in response, this note aims to answer six questions: (1) Which countries are more exposed to AI adoption? Which countries are likely to benefit most? (2) How differently will AI affect workers within countries? Which segments of workers are likely to thrive and which face more risks? (3) Historically, how frequently did workers shift between roles now facing varying AI exposure? What insights do these shifts reveal about labor adaptability? (4) In what ways could AI reshape income and wealth inequality? (5) What is the potential impact for growth and productivity? (6) Which countries appear better prepared for the AI transition? How can policies maximize gains and mitigate likely AI-related challenges?

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