Does artificial intelligence affect firms’ inner wage gap?

Abstract

This paper studies the effect of artificial intelligence on firms’ inner wage gaps. We use data from the International Federation of Robotics (IFR) and China’s A-share listed firms from 2011 to 2019. The results indicate that artificial intelligence is conducive to narrowing the wage gap. After considering the potential endogeneity problems in the relationship between artificial intelligence and the wage gap and a set of robustness tests, the main effect still persists. Mechanism analysis shows such an effect is more pronounced when firms are intensively skilled or have weakened managerial power. Further analysis shows that artificial intelligence primarily reduces the wage gap in technology-intensive industries.