Is AI Widening the Wage Gap? A Hybrid Agentic Simulation for Labor Equity

Zhongbo Hu; Zonghang Wu; Georgina Curto; Aocheng Tang; Yilei Shao

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arXiv · 2609.33367

Is AI Widening the Wage Gap? A Hybrid Agentic Simulation for Labor Equity

Zhongbo Hu·Zonghang Wu·Georgina Curto·Aocheng Tang·Yilei Shao

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Abstract

Artificial intelligence (AI) is reshaping labor markets, yet its effects on wage distribution and the underlying mechanisms remain insufficiently understood. Conventional analytical approaches are limited in their ability to directly examine the dynamic evolution of worker behavior and income distribution under sustained AI shocks and counterfactual policy scenarios. To address this limitation, we present a hybrid agentic framework that aims to challenges of scalability of rule-based models and the limited explainability in LLM-agentic frameworks. Using this framework and sociodemographic data from China, we simulate changes in wage distribution under repeated AI shocks. The results show that both the average-wage ratio between workers in the top and bottom income deciles (T10/B10) and the Gini coefficient increase persistently, suggesting that AI shocks widen the wage gap and exacerbate income inequality. This pattern of a widening wage gap remains robust across alternative large language model decision engines and 30 Monte Carlo simulations. We further conduct counterfactual policy experiments. The results show that education subsidies targeted at low-income workers increase both the number of skill-upgrading attempts and the number of successful upgrades, with particularly pronounced improvements in the upskilling success probability of workers in the bottom income decile. These effects enable the policy to partially mitigate wage inequality. The proposed framework provides an interpretable simulation approach for examining the effects and mechanisms of AI shocks on wage distribution. It also offers policymakers a complementary analytical tool for evaluating policy interventions.

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Zhongbo Hu, Zonghang Wu, Georgina Curto, Aocheng Tang, Yilei Shao. 2026-09-27. Is AI Widening the Wage Gap? A Hybrid Agentic Simulation for Labor Equity. https://arxiv.org/abs/2609.33367

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