Artificial Intelligence and Economic Growth: A Comprehensive Review of Productivity, Employment, and Inequality Effects

Artificial Intelligence (AI) is increasingly recognized as a transformative technology with significant implications for economic growth, productivity, employment, and income distribution. This comprehensive review examines the evolving relationship between AI adoption and economic performance by synthesizing evidence from existing theoretical and empirical literature. The review focuses on three interconnected dimensions: the contribution of AI to productivity and economic growth, its effects on employment and the changing nature of work, and its potential implications for economic inequality. The findings indicate that AI can enhance economic growth by improving production efficiency, automating routine activities, supporting innovation, reducing operational costs, and enabling new products and services. However, the productivity gains associated with AI are likely to vary across industries, firms, and countries depending on technological infrastructure, human capital, organizational capabilities, and institutional conditions. The review further shows that AI can simultaneously create new employment opportunities while displacing or transforming certain routine and highly automatable tasks, increasing the importance of reskilling and lifelong learning. In relation to inequality, AI may widen income and wealth disparities when its benefits are concentrated among highly skilled workers, technology-intensive firms, and capital owners, although inclusive education, labor-market policies, social protection, and broad access to digital technologies can help distribute its gains more equitably. Overall, the review concludes that AI has substantial potential to support long-term economic growth, but its outcomes are not predetermined. Effective policy frameworks and investments in human capital, digital infrastructure, innovation, and inclusive institutions are essential for ensuring that AI-driven economic transformation generates broad-based and sustainable prosperity.