The advent of artificial intelligence presents a paradox at the heart of modern economic theory: a technology capable of generating unprecedented wealth while simultaneously displacing the very workforce that sustains consumer demand.
This essay argues that without proactive policy intervention, AI-driven automation will exacerbate income inequality and hollow out middle-skill employment across developed economies (Acemoglu & Restrepo, 2018).
Labor economists have long documented the effects of technological displacement on wage structures. What distinguishes AI from prior automation waves is its cognitive scope — tasks once considered uniquely human are now replicable at scale and near-zero marginal cost