The effects of technological innovations on income inequality on the U.S. labor market

Technological innovation has significantly reshaped the structure of labor markets, especially in most industrialized nations like the United States. Though these changes encourage economic growth and productivity, they have also increased income inequality by rewarding highly skilled workers at the expense of the low-skilled. This paper discusses how technological innovations like automation and skill-biased technological change influence income inequality in the U.S. labor market, taking into consideration both influencing factors on wage distribution and polarization of income. It also addresses the issue of gender inequality, drawing a clear line of how technological changes have been affecting male and female workers over time. Women, especially those involved in low-wage employment, have recently been more successfully pushed out of their jobs by automation. Such a tendency has served only to increase existing disparities. Based on the literature review and current data analysis, this paper sheds light on the way technological change actually shapes income distribution and provides policy recommendations that would help tone down the inequalities accrued. Technological change is a major cause of economic growth historically, but lately, with rising income gaps, many have begun to question its role. Automation, artificial intelligence, and other digital technologies have polarized wages even further in the U.S., increasing demand for highly skilled workers but either displacing or offering stagnant wages for low-skilled labor. SBTC is one such change that has accelerated the inequality of wages within the last few decades. Technological change has also reshaped gender in the workplace: while new opportunities have opened up, automation has fallen particularly heavily on women in low-wage jobs, widening the gender pay gap. It is important that these disparities be addressed if equitable economic policies are to be developed in light of continued technological changes in the labour market.