In recent years, the fast-growing artificial intelligence (AI) technology has deeply integrated with a large number of traditional industries, driving the digital transformation of transportation, medical care, education and many industrial fields, and bringing revolutionary changes to the development of industries. At the same time, after four decades of fast economic growth, China has had middle income groups of about 400 million people.What impact will the flourishing AI technology have on China’s current important goal of further "expanding the size of middle income groups"?
Based on the influence of technological change in the past, economists represented by Joseph Schumpeter and Philippe Aghion put forward the concept of "creative destruction". New technological change, exemplified by AI, may also follow the process of "creative destruction". On the basis of theoretical analysis and AI application prospect data, the research team estimated the impact of AI on middle income groups in 2025, 2030 and 2035, and found three effects.
The first is the substitution effect: the replacement of traditional occupations and jobs by artificial intelligence (such as the replacement of blue-collar workers and financial analysts by intelligent robots). The second is the creation effect: the creation of new occupations and jobs by artificial intelligence (such as data marker, cloud computing engineer). The third is the income effect: artificial intelligence will bring income rise through improving labor productivity and economic growth, with more demand and employment opportunities. In general, AI has both substitution effect and creation effect. AI can replace both high-skilled and low-skilled labor force, and the impact on low-skilled labor force will be greater in this process. So we need to pay more attention to those low-skilled labor that could be replaced by AI.
How can we effectively improve the working conditions and incomes of those affected by AI, promote social equity, encourage innovation and boost the benefits of the whole society? In terms of policies and measures, on the one hand, we need to give full play to the function of social security, especially place extra emphasis on the low-skilled and low-income groups; on the other hand, education, training and re-employment policies should be nailed down for such groups. We should vigorously build and improve China's social security system and give full play to its function of providing support to the unemployed and entrepreneurs, so that they can face the impact of technological change and avoid the possible adverse impact on their income and life.
Special attention should be paid to low-income and low-skilled labor. It is advised that China invest heavily in the education of knowledge and skills needed in the AI era, and develop the adaptability and learning ability of the new generation of labor force for new jobs and new occupations. At the same time, it is necessary to reform and improve the existing system of vocational education, vocational training and re-education, popularize vocational and skill training widely, and advocate lifelong learning so that skilled labor force can adapt themselves to new jobs and new skills in the AI era as soon as possible.
As the penetration of computers and Internet varies in urban and rural areas, it is likely to form a new "digital divide" in the AI era. Policies and measures should be taken to prevent the "digital divide" in the AI era, further narrow the gap between urban and rural areas and reduce the development gap between regions. In order to improve the income distribution, we might consider an increase of the tax on capital income, and even levy robot tax to lay a strong redistribution foundation for the expansion of middle income groups.
Professor Zhou Li'an, Guanghua School of Management, Peking University
Published on August 25, 2022