The Potential Distributive Impact of AI-driven Labor Changes in Latin America

Abstract

This paper investigates the potential distributional consequences of artificial intelligence (AI) adoption in Latin American labor markets. Using harmonized household survey data from 14 countries, we combine four recently developed AI occupational exposure indices—the AI Occupational Exposure Index (AIOE), the ComplementarityAdjusted AIOE (C-AIOE), the Generative AI Exposure Index (GBB), and the AIGenerated Occupational Exposure Index (GENOE)—to analyze patterns across countries and worker groups. We validate these measures by comparing task profiles between Latin America and high-income economies using PIAAC data, and develop a contextual adjustment that incorporates informality, wage structures, and union coverage. Finally, we simulate first-order impacts of AI-induced displacement on earnings, poverty, and inequality. The results show substantial heterogeneity, with higher levels of AI-related risk among women, younger, more educated, and formal workers. Indices that account for task complementarities show flatter gradients across the income and education distribution. Simulations suggest that displacement effects may lead to only moderate increases in inequality and poverty in the absence of mitigating policies.