Impact of industrial intelligence on income inequality of urban residents in China

We construct a theoretical model based on the task-based approach to study how industrial intelligence affects the residents’ income gap through employment substitution and creation effect on different skilled labor, compensation effect on industries and industrial structure upgrading effect on industrial sectors. Subsequently, we present the benchmark regression analysis elucidating the impact of industrial intelligence on income inequality among urban residents in China. We employ a comprehensive set of control variables including economic development indicators, financial metrics, trade openness measures, government intervention variables, and other relevant factors to ensure the robustness of our findings. Furthermore, we explore heterogeneous effects to uncover how industrial intelligence affects income inequality differently across various demographic groups and regions. Based on our empirical analysis, we discover several key findings. Firstly, the advancement of industrial intelligence has notably exacerbated the income disparity among urban residents in China. This conclusion remains true even after conducting robustness test and endogenous treatment. Secondly, the impact of industrial intelligence on income inequality operates through distinct mechanisms. While it widens the income gap through employment substitution and creation effect as well as industrial upgrading effects, it also narrows the gap via the compensation effect. Lastly, industrial intelligence disproportionately affects certain demographic groups and regions. Specifically, it exacerbates income inequality among middle-aged and elderly individuals and in areas with weaker employment protection measures in China. The insights derived from our research can inform policymakers about striking a balance between economic growth and the well-being of the population, ultimately guiding the formulation of effective and inclusive policies in response to technological advancements.