The Political Economy of Artificial Intelligence: Evidence from Western Europe

Ranjit Lall
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Ranjit Lall: University of Oxford

No vmgdj_v1, SocArXiv from Center for Open Science

Abstract: While advances in artificial intelligence (AI) are feared to bring about widespread job losses, workers highly exposed to the technology tend to anticipate productivity-driven improvements in their earnings and employment prospects. I argue that this paradox has important political economy implications: if labor complementarities are expected to outweigh substitution effects—raising income without commensurately intensifying employment risks—exposure to AI should weaken rather than strengthen support for redistributive policies and their political advocates. I test this argument using a combination of observational and original experimental data from Western Europe, finding that occupation-level AI exposure is negatively associated with support for redistribution, the left, and the (increasingly pro-welfare) populist right but positively associated with support for the mainstream right. The results enhance our understanding of the political economy of digitalization, suggesting a discrepancy between the perceived distributional consequences of AI and earlier automation technologies that have primarily displaced labor.

Date: 2026-07-21
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:vmgdj_v1

DOI: 10.31219/osf.io/vmgdj_v1

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