Economics of Artificial Intelligence

This book offers a rigorous but accessible economic map of the AI economy. Moving beyond both technological hype and alarmist predictions of mass unemployment, Ceyhun Elgin explains how AI changes the allocation of tasks between humans and machines, why productivity gains may be delayed or uneven, and how wages, inequality, market power, public finance, financial stability, and global development are likely to be transformed. AI, the book argues, is not simply a new tool that makes existing work faster. It is a general-purpose, task-reallocating technology that changes the organization of production itself.Bringing together macroeconomics, labor economics, industrial organization, finance, public finance, development economics, and political economy, the book provides a unified framework for understanding the most important economic transformation of our time. It examines why AI may generate a productivity boom in some sectors while producing displacement and concentration in others; why superstar firms may become even more powerful; how tax systems and welfare states must adapt when value shifts from labor toward data, software, and intangible capital; and why developing economies may face both new opportunities and new risks in an AI-driven world.The book’s central message is clear: AI’s economic future is not predetermined. The same technology can support broad-based prosperity, deepen inequality, strengthen public services, entrench corporate power, expand access to knowledge, or intensify social and geopolitical divides. Outcomes will depend on institutions, competition, education, regulation, public investment, and the distribution of bargaining power.Designed for researchers, graduate students, policymakers, business leaders, and intellectually engaged readers, this book explains not only what AI can do, but how it changes the economic foundations of growth, work, welfare, and power.