AI innovation linked to a shrinking share of income for European workers
John E. Kaye
- Published
- News, Technology

New analysis of regional data across Europe indicates that advances in artificial intelligence are moving income away from labour and towards capital, raising concerns about deepening economic divides
Rising adoption of artificial intelligence across Europe has coincided with a measurable decline in labour’s share of total income, new research suggests.
A study from the Vienna University of Economics and Business found that regions with higher levels of AI innovation tend to see weaker wage and employment growth for workers, especially in medium- and high-skill roles.
The analysis by Klaus Prettner, Professor of Macroeconomics at WU Wien, and his co-authors, suggests that every doubling of regional AI innovation corresponds to a 0.5% to 1.6% drop in the share of income accruing to workers.
Across European regions, observed levels of AI activity since 2000 explain up to 0.31 percentage points of the overall decline.
According to the researchers, the change is driven mainly by weaker wage growth and deteriorating employment conditions among high-skill workers, while wage compression among medium- and low-skill groups plays a smaller role.
The results indicate that the distributional effects of AI differ from common expectations within the labour market.
Gains from AI have flowed disproportionately to capital owners, with workers facing an erosion of income shares and increased pressure on job security in certain occupations, it found.
Without policy intervention, continued technological progress risks deepening regional and social divides across Europe as the distributional effects of AI reshape labour markets, it adds.
The findings, published in the European Economic Review, come amid wider European debates over automation, productivity growth and the future of high-skill employment.
Speaking yesterday, Professor Prettner said: “This study challenges the wide-held assumption that AI benefits skilled workers the most. Instead, it reveals that AI-driven automation often substitutes for cognitive tasks typically performed by medium- and high-skill workers, reducing their wage growth and their job security. By contrast, low-skill workers, though facing lower wages, may see modest gains in employment due to demand for roles that are difficult to substitute by AI systems.”
READ MORE: ‘Facebook’s job ads ruling opens a new era of accountability for artificial intelligence’. France’s equality watchdog has ruled that Facebook’s job-advertising algorithm engaged in indirect gender discrimination, a finding that for the first time treats bias in code as a breach of equality law. Here, Vendan Kumararajah examines a precedent that extends accountability from human decision-makers to machine systems — a shift with major implications for recruitment, healthcare, and finance, where algorithms now shape access to work, credit, and care.
Do you have news to share or expertise to contribute? The European welcomes insights from business leaders and sector specialists. Get in touch with our editorial team to find out more.
Main image: Credit, Panumas Nikhomkhai/Pexels
RECENT ARTICLES
-
‘Houston, we have a problem’: astronauts fix loo aboard Artemis II -
EU moves to make Europe’s tinderbox landscapes less prone to wildfire -
Artemis II lifts off for Moon mission – here is what the astronauts will be doing day by day -
GITEX Africa Morocco to host 1,450 exhibitors and startups as Marrakech event sharpens focus on AI and digital sovereignty -
Artemis II countdown begins as astronauts prepare for first crewed Moon mission in 50 years -
United to introduce economy seat row that converts into couch on long-haul flights from 2027 -
Australia tops global ranking of the world’s most beautiful airport landings -
Ivo Klein takes over Liechtenstein bankers’ body after nine-year handover -
EXCLUSIVE: LA unveils Ghostbusters-style car to fight post-wildfire ‘toxic soup’ -
Supermarkets move to end sale of live lobsters and crabs ahead of UK ban -
Snowdonia church rings again after 150 years thanks to national ap-peal -
Social media giants hit with $6m verdict in landmark youth harm case -
Former Google executive launches €50m fund targeting Europe’s deep tech scale-up gap -
Airbus to acquire Ultra Cyber in UK defence cyber expansion -
The European joins The Content Exchange as publisher accelerates digital expansion -
Animal rights activists stage second day of protests at European Commission over lobbying claims -
Global energy crisis 'worse than 1970s oil shocks combined', IEA chief warns -
New Hindu Kush Himalaya glacier reports warn of deepening risk to Asia’s water security -
UK exposed by cyber omission in Spring Statement as threats intensify, ISF chief warns -
Sadiq Khan says Labour should back return to EU -
World’s most ethical companies revealed as 138 firms make 2026 list -
Celebrities who apologise after a scandal get a better reaction than those who deny it, study finds -
New 235-room hotel planned for Dublin’s Liberties after €54.2m funding deal -
Unclear AI rules risk driving talent away from UK employers, survey suggests -
Scotland’s oldest heritage charity launches £1.5m appeal to buy permanent Edinburgh home

























