--- title: "Artificial Intelligence and Inequality: Policy Paths in a Polarized Future · AI Fault Line" url: https://aifaultline.com/research/p/doi-10-1163-15691497-20262006/ description: "AI Fault Line is a neutral, evidence-cited field guide to why experts looking at the same developments disagree about AI's effect on productivity, jobs, inequality, regulation and the pace of change." --- [Research](https://aifaultline.com/research/) # Artificial Intelligence and Inequality: Policy Paths in a Polarized Future Hassan Daliri · Perspectives on Global Development and Technology · 2 Jul 2026 [Read original source](https://doi.org/10.1163/15691497-20262006) Where this sits in the debate - [Will AI widen inequality?](https://aifaultline.com/debate/inequality/) · its finding supports the claim ([why studies differ](https://aifaultline.com/debate/inequality/#why)) - [Should governments act on AI now?](https://aifaultline.com/debate/regulation/) · its finding supports the claim ([why studies differ](https://aifaultline.com/debate/regulation/#why)) Direction of the finding as read from the abstract by an AI model ([AI-written](https://aifaultline.com/about/)). ## Key takeaway [AI-written](https://aifaultline.com/about/) An agent-based simulation shows that rapid automation without complementary skills investment sharply worsens income inequality and depresses labor's income share, while combining targeted skill subsidies with progressive taxation substantially reduces inequality at both ends of the distribution and shifts employment toward AI-complementary sectors. The core claim — that AI's distributional effects are policy-contingent rather than technologically predetermined — pushes back on deterministic 'AI will increase inequality' narratives. ## Abstract Abstract This study develops an agent-based simulation model to investigate how artificial intelligence (AI) and automation technologies affect income inequality under varying redistributive and human capital policies. Drawing on theories of skill-biased technological change, labor market polarization, and capital–labor substitution, the model captures dynamic interactions between heterogeneous agents, sectoral employment shifts, and evolving technological parameters. Simulation results reveal that rapid automation without complementary investment in skills (Scenario S2) exacerbates inequality, depresses labor income shares, and leads to pronounced employment displacement—mirroring trends observed in advanced economies. By contrast, policy configurations combining targeted skill subsidies with progressive taxation (Scenario S5) are shown to significantly reduce both top-end and bottom-end inequality, while facilitating a structural shift toward AI-complementary employment sectors. Sensitivity analysis underscores the importance of initial skill heterogeneity and learning efficiency in shaping long-term distributive outcomes. These findings provide compelling evidence that the inequality effects of AI are not technologically predetermined, but policy-contingent. The study highlights the critical role of redistribution and adaptive human capital strategies in aligning digital transformation with inclusive economic development. ## About this publication **Academic journal.** Published in an academic journal — typically peer-reviewed before publication, though indexing alone doesn't guarantee review depth. Published 2026 (4 months ago) Citations 0 (OpenAlex) 0 citations recorded by OpenAlex — too few 2026 papers in this collection for a fair comparison. [Chart: published 2026] ## More on this topic Related by theme, not necessarily by method or conclusion. - [The Effects of Generative AI on High Skilled Work: Evidence from Three Field Experiments with Software Developers](https://aifaultline.com/research/p/doi-10-2139-ssrn-4945566/) SSRN · 2024 - [GPTs are GPTs: An Early Look at the Labor Market Impact Potential of Large Language Models](https://aifaultline.com/research/p/doi-10-48550-arxiv-2303-10130/) arXiv · 2023 - [Experimental evidence on the productivity effects of generative artificial intelligence](https://aifaultline.com/research/p/doi-10-1126-science-adh2586/) Science · 2023 - [The simple macroeconomics of AI](https://aifaultline.com/research/p/doi-10-1093-epolic-eiae042/) Economic Policy · 2024 Overview assembled automatically from collected metadata. [How this site is built](https://aifaultline.com/about/).