Artificial intelligence and intra-firm pay dispersion: Evidence from China

Tingyu Liu, Peng Huang and Qiaoru Wang

China Economic Review, 2025, vol. 93, issue C

Abstract: This paper examines the impact of AI on intra-firm pay dispersion using a patent database and a micro-database of Chinese A-share listed companies from 2003 to 2021. The results indicate AI adoption reduce intra-firm pay dispersion, primarily through its suppression effect on executive compensation. This effect is particularly pronounced in firms characterized by capital-intensive operations, non-state ownership, and coastal locations. While organizational scale expansion partially offsets‌ AI's role in narrowing pay dispersion, ‌task-based decomposition reveals‌ AI exacerbates wage polarization‌ by ‌disproportionately reduces wage of labors specializing in routine tasks. Additionally, industry-level analysis confirms‌ that AI amplifies wage inequality both within and across sectors.

Keywords: Artificial intelligence; Pay dispersion; Wage polarization; Wage inequality (search for similar items in EconPapers)
JEL-codes: J24 J31 O32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:93:y:2025:i:c:s1043951x25001592

DOI: 10.1016/j.chieco.2025.102501

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