Australian minister says AI may narrow skill gaps but widen wealth inequality

Australia's Assistant Minister for Competition Andrew Leigh said AI could narrow productivity gaps between workers while widening income and wealth inequality through concentrated capital ownership and supplier market power, in an address to the JPMorgan AI Conference. He identified four channels: differences between workers, the distribution of jobs, the division of income between labor and capital, and the distribution of economic rents among companies and countries.

Leigh cited research involving more than 5,000 customer support agents, where AI increased overall productivity by 15 percent and raised output among less skilled and less experienced workers by about 30 percent. Another experiment found that access to generative AI removed about three quarters of the education based productivity gap for a workplace task.

Evidence on employment remains mixed. Australian employment among people aged 20 to 24 has grown slightly faster than employment among older workers since ChatGPT's release, while software programmer employment increased by about 25 percent. However, occupations with the greatest exposure to generative AI recorded slower employment growth than those with the least exposure.

Leigh said income inequality could still rise if automation shifts returns from labor to capital. He also warned that businesses relying on a small number of model providers could surrender part of their productivity gains through access and usage fees. The Australian Treasury expects AI to reshape the economy, while the Productivity Commission estimates it could raise Australia's multifactor productivity by more than 2 percent over the next decade.