For anyone worried about AI’s effects on jobs, here’s good news: New research by Stanford economist Lukas Althoff concludes that artificial intelligence is likely to reshape jobs rather than eliminate entire occupations and will ultimately increase wages for all workers – with the biggest gains benefiting lower-skilled workers.

The reason, according to Althoff’s study, is that AI will simplify many job tasks. By reducing the skills required to perform specific tasks, AI will enable lower-skilled workers to take on higher-paying roles. His estimates suggest that, over a lifetime, these workers stand to earn at least 15 to 45 percent more than they would without AI’s support. Depending on how rapidly AI advances, these gains to lower-skilled workers could be even higher.

If so, AI’s workplace impact will be to narrow the wage gap between the highest and lowest earners, which has been growing and many fear will continue to worsen in an AI world.

Althoff’s analysis, released as a working paper by the National Bureau of Economic Research, is based on a novel framework he developed with Hugo Reichardt of the Barcelona School of Economics that introduces a new way of understanding how technological change affects workers. Unlike previous models that focus primarily on automation or augmentation – where machines either replace human workers entirely or help them become more productive – Althoff and Reichardt identify “simplification” as a key outcome of technological change.

While all workers stand to benefit as AI streamlines tasks, lower-skilled workers will gain the most as their wages rise faster than it does for other workers, Althoff and Reichardt say. Other research has found, too, that AI is helping lower-skilled workers become more productive in their jobs faster than it is for higher-skilled employees.

Althoff says there’s evidence already that AI is leveling the playing field. He points to the growing number of solo entrepreneurs in the U.S. and the recent case of an 18-year-old high school student in California who received an informal job offer from NASA after he identified 1.5 million previously unknown objects in space from his laptop.

“Our research highlights the more optimistic case for AI’s impact on labor market inequality,” says Althoff, who is an assistant professor of economics in the Stanford School of Humanities and Sciences and a faculty fellow at the Stanford Institute for Economic Policy Research (SIEPR).

According to Althoff, the research differs from many other studies to date on AI’s job impacts, which have focused on the types of jobs that are most exposed to – or at risk of – disruption. But the actual harms to workers in exposed jobs depends on whether AI automates, accelerates, or simplifies tasks that they were already good at or had not yet mastered, he says.

“Our paper translates these now-standard measures of AI exposure into meaningful wage and employment impacts for each individual in the economy, taking into account a worker’s different strengths and weaknesses, their ability to learn new skills and transition to other occupations, and economy-wide changes like changing demands for goods and services,” Althoff says.

The result, he says, “is a set of more disciplined predictions about the AI economy.”

Using their framework, Althoff and Reichardt uncover other insights. Among them:

• Lower-skilled workers have been slower to adopt AI, but not enough to undo the technology’s equalizing effect.
• The overall value of skills will decline, with ramifications for higher education as fewer people invest in advanced degrees.
• For those who do go to college, majors high in manual and technical skill will fare better than those that are intensive in verbal and social skills. Degrees in mechanics, engineering, culinary arts, cosmetology, architecture, transportation, and physics will fare better in the job market than degrees intensive in verbal and social skills, such as political science, sociology, philosophy, law, religion, and women’s studies.