A recently published International Monetary Fund (IMF) report highlighted the potential disparities in artificial intelligence’s (AI’s) impact on different demographic groups within India. It suggested that AI's influence on income distribution in India follows distinct patterns.
The report revealed that higher-income earners are more likely to benefit from AI adoption, raising questions about the potential exacerbation of income inequality.
“AI’s gains will likely disproportionately accrue to higher-income earners, especially in countries such as India and, to a lesser extent, the US, where complementarity steadily rises at the top of the distribution. The phenomenon will likely be more muted in countries such as the UK, where the increase in complementarity plateaus at the top,” noted the report.
The report surmised that among emerging market economies, India’s high-exposure employment to AI is lowest at 26 per cent, compared to 41 per cent in Brazil. Meanwhile, around 70 per cent of employment in the UK and 60 per cent in the US falls within AI high-exposure occupations. This distribution is roughly equal between positions characterised by high complementarity and those with low complementarity.
“In India most workers are craftspeople, skilled agricultural workers, and low-skilled, or 'elementary' workers; most of these are in the low-exposure category,” mentioned the report.
The report largely implied that emerging markets and developing economies may experience fewer immediate disruptions from AI. However, it is crucial to note that many of these nations lack the necessary infrastructure and skilled workforce to fully leverage the advantages of AI.
This raises the concern that, over time, the technology could exacerbate inequality among nations, said Kristalina Georgieva, Managing Director at the International Monetary Fund in a blog post.
“The effect on labor income will largely depend on the extent to which AI will complement high-income workers. If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labor income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favor high earners. Both of these phenomena could exacerbate inequality.” - Kristalina Georgieva, Managing Director, International Monetary Fund (IMF)