Artificial intelligence and within-firm wage gaps: Evidence from China’s manufacturing sector

Yanhui Yin, Meiying Chen, Shasha Fang · International Labour Review · 7 Jul 2026

Where this sits in the debate

Will AI widen inequality? · its finding supports the claim (why studies differ)

Direction of the finding as read from the abstract by an AI model (AI-written).

Key takeaway AI-written

Using firm-level text mining to measure AI adoption among Chinese manufacturers, the authors find AI transformation significantly widens the wage gap between executives and ordinary employees. They attribute this to skill-biased productivity gains and to a falling employment share of low-skilled routine workers, with stronger effects in capital-intensive and more digitised firms.

The paper in three steps AI-written

Written by an AI agent from the paper's abstract, which is the primary source and is quoted below.

The question

Does AI transformation widen wage gaps between executives and ordinary employees inside Chinese manufacturing firms?

The approach

Firm-level analysis of Chinese manufacturers, using text mining of firm documents to measure both AI adoption and strategic intent, then relating that measure to within-firm pay gaps and testing mechanisms and firm heterogeneity.

The findings

AI transformation significantly widens the executive-to-employee wage gap. Two mechanisms are identified: productivity gains that favour high-skilled, non-routine workers, and a falling employment share of low-skilled routine labour. Effects are stronger in capital-intensive firms and those with more advanced digital infrastructure.

How to read it: observational. Analysis of real-world firm, worker, or market data — realistic settings; causal claims depend on the identification strategy.

Limitations and counterpoints AI-written

AI adoption is measured from text in firm documents, which may capture stated intent more than actual use. The abstract does not describe the identification strategy, and results cover one sector in one country.

Abstract

In this study, we investigate the impact of artificial intelligence (AI) transformation on within-firm wage disparities in China’s manufacturing sector. Using firm-level text mining to capture both AI adoption and strategic intent, we provide a comprehensive assessment of AI’s distributional consequences. Our findings reveal that AI transformation significantly widens wage gaps between executives and ordinary employees. Two underlying mechanisms drive this effect: technology bias – where productivity gains from AI disproportionately benefit high-skilled, non-routine workers – and labour restructuring, which reduces the employment share of low-skilled, routine-task labour. These disparities are further influenced by firm heterogeneity, with stronger effects observed in capital-intensive firms and those with more advanced digital infrastructure. This study offers policy recommendations focused on reskilling, inclusive labour strategies and sector-specific interventions to mitigate the inequality risks posed by AI in fast-developing economies.

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 (3 months ago)
Citations: 0 (OpenAlex)

0 citations recorded by OpenAlex — too few 2026 papers in this collection for a fair comparison.

Cited elsewhere in this guide

State of the debate: Will AI widen inequality?