The Impact of AI on Income Inequality in the USA: The Mediating Role of Informal Labor Markets and the Moderating Role of Digital Financial Inclusion

In the United States, the use of artificial intelligence (AI) has grown exponentially over the past ten years, changing businesses and job markets. Even though artificial intelligence (AI) has led to more innovation and output, it has also made income inequality worse by replacing workers with average skills and making more people rely on unpaid work. The study investigates the mediating effects of informal labor and the moderating effects of digital financial inclusion (DFI). The study uses balanced panel data from all 50 US states between 2015 and 2023. The results show that being exposed to AI is strongly linked to more income inequality (β = 0.164, p < 0.01), and that the rise in unpaid work accounts for about 31.3 percent of this effect. States with high levels of DFI reduced the adverse effects of informality by 59.5%. AI impacts can be lessened by digital banking systems that are open to everyone.