Impact of Artificial Intelligence on Income Inequality

This document is a speech delivered by Michael S. Barr, a member of the Board of Governors of the Federal Reserve System, at the Financial Inclusion Conference. The speech addresses the potential effects of artificial intelligence (AI) on living standards and income inequality. It outlines the dual possibilities of AI either raising living standards by enhancing productivity, particularly for lower- and middle-income workers, or exacerbating income and wealth inequality by displacing jobs and concentrating benefits among higher-income individuals. The speech discusses historical technological advances and their impacts on labor markets, emphasizing the importance of policy considerations in managing AI's effects on education, job training, and workforce development. Barr highlights the need for equitable sharing of AI's benefits across society to prevent widening inequalities. He also examines the components of income and wealth inequality, noting the disparities in labor income and asset ownership, and raises questions about AI's role in either expanding opportunities or reinforcing existing advantages.