Does artificial intelligence promote common prosperity within enterprises? —Evidence from Chinese-listed companies in the service industry

• Published in: Technological forecasting & social change 2024-03, Vol.200, p.123180, Article 123180
• Main Authors: Chen, Kaiming, Chen, Xiaoqian, Wang, Zhan-ao, Zvarych, Roman
• Format: Article
• Language: English
• Subjects: Artificial intelligence; Employment structure effect; Service industry; Share of labor income; Wage-productivity effect
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2023.123180

As the largest industry that absorbs labor from different levels of employment and provides different levels of labor remuneration, the service industry has faced severe challenges from the wave of artificial intelligence replacement. This study examines whether artificial intelligence promotes shared prosperity among service industry enterprises based on microdata of listed companies in the Chinese service industry from 2008 to 2022. The main research results indicate that the application of artificial intelligence in the service industry significantly reduces enterprises' labor income share. The main mechanisms of action include the employment structure effect of squeezing out low-educated and frontline workers and the wage-productivity effect that improves labor productivity but benefits capital income, leading to an unequal income distribution. Research has found that improving the integration of regional labor markets and workers' bargaining power can help alleviate the negative effects of artificial intelligence applications on the share of labor income in the service industry. This study helps developing countries, such as China, manage the impact of the widespread application of artificial intelligence on the labor market in the service industry and provides important policy insights for achieving common prosperity. •Providing AI as a new perspective to explain the decline in labor income share of Chinese service industry enterprises•Supplementing the existing literature with micro evidence support utilizing panel data of Chinese-listed companies•Exploring employment structure effect and wage-productivity effect from AI to complement the research on the impact mechanism•Proposing relevant initiatives to provide policy insights to mitigate AI-induced declines in labor income