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
-
Keir, on your bike! Boris Johnson uses father Stanley’s book launch to take swipe at Starmer -
Exclusive: Boris joins father Stanley and brothers Max, Leo and Jo for BSA launch of new Marco Polo book -
Firms ‘wasting AI’ by using it to speed up bad habits -
AstraZeneca revives £300m UK investment after pausing major projects -
UK refineries asked to maximise jet fuel supply amid Hormuz disruption -
Britain must shape AI future or be left at its “mercy and whim”, Liz Kendall warns -
BP profits more than double as oil price surge lifts trading business -
MINI at 25 – the numbers behind the Oxford-built icon -
More than half of employers say they cannot find graduates with the right AI skills, study finds -
Stratospheric telecoms blimp completes “historic” record 12-day flight over Atlantic -
MICE market forecast to reach $2.3tn by 2032, report says -
Mobile operators warn of higher bills and slower 5G rollout after energy support exclusion -
Lufthansa cuts 20,000 summer flights as Iran war drives up fuel costs -
People act more rationally when they think they are dealing with AI, study finds -
Toxic bosses may thrive at work, but the office pays the price, new research finds -
Europe launches ‘anti-kill switch’ cloud shield as Trump fears grip Brussels -
Starmer summons social media chiefs to Downing Street over child safety -
The European Spring 2026 edition – out now -
Inside Qantas’ new ultra-long-haul A350s with stretch zone, jet lag lighting and fewer seats -
Landmark UK nuclear deal to cut reliance on foreign energy after Middle East tensions -
Breitling launches £9,500 Artemis II watch as Moon crew returns to Earth -
Ivy and Annabel’s owner agrees £1.4bn sale of hospitality empire to Abu Dhabi-backed buyer -
Orbán concedes defeat as Péter Magyar heads for sweeping Hungary election victory -
UAE unveils plans for major new military rescue training centre -
Electric air taxis move closer after aircraft completes key in-flight switch


























