Income inequality and monopolies
Generative AI can create not only income inequality at the societal level but also monopolies at the market level. Individuals who are engaged in low-skilled work may be replaced by generative AI, causing them to lose their jobs (Zarifhonarvar, 2023). The increase in unemployment would widen income inequality in society (Berg et al., 2016). With the penetration of generative AI, the income gap will widen between those who can upgrade their skills to utilize AI and those who cannot. At the market level, large companies will make significant advances in the utilization of generative AI, since the deployment of generative AI requires huge investment and abundant resources such as large-scale computational infrastructure and training data. This trend will lead to more uneven concentration of resources and power, which may further contribute to monopolies in some industries (Cheng & Liu, 2023).
ENTITY
1 - Human
INTENT
1 - Intentional
TIMING
2 - Post-deployment
Risk ID
mit551
Domain lineage
6. Socioeconomic and Environmental
6.2 > Increased inequality and decline in employment quality
Mitigation strategy
1. Prioritize Investment in Human Capital Development: Establish comprehensive, mandated upskilling and reskilling initiatives focused on developing competencies in AI utilization, data literacy, and critical analysis. These programs are essential to mitigate the skill-biased technological change that leads to elevated wage inequality by improving the labor market relevance of low- and mid-skilled workers. 2. Implement Proactive Antimonopoly Governance: Enact *ex-ante* regulatory frameworks and ensure vigorous antitrust enforcement, with specific scrutiny on vertical integration and the acquisition of key AI inputs, such as computational infrastructure and vast proprietary datasets. This measure is crucial to ensure competitive market dynamics and prevent the concentration of generative AI resources that fuels industry monopolies. 3. Establish Structural Economic Safety Nets: Investigate and pilot robust, non-employment-dependent social contracts, such as a Universal Basic Income (UBI) or technology-based wealth transfer mechanisms. These systems are designed to provide a foundational layer of economic stability, thereby ensuring the equitable distribution of AI-driven productivity gains and mitigating the societal fallout from large-scale labor displacement.