JERUSALEM (VINnews) — The accelerated adoption of artificial intelligence tools is expected to significantly curb the pace of wage growth in Israel over the coming decade, according to a study by the Taub Center For Social Policy, published on Channel 12.

According to the forecast, the average real wage will rise at an annual rate of only about 1.6%, a sharp decline compared to the previous decade, which saw an average yearly increase of 2.7%. The researchers emphasize that the impact will not be evenly distributed and will primarily affect specific groups within the labor market.

The study was conducted by Michael Dabay, Prof. Gil Epstein, and Prof. Avi Weiss. It is based on a methodology developed by Daron Acemoglu of MIT, the 2024 Nobel laureate in economics. This marks the first application of the model to Israeli labor market data. The research relies on data from 2018 to 2022, before generative AI tools such as ChatGPT became widespread among the general public.

According to the study’s findings, high school graduates and holders of bachelor’s degrees are expected to experience wage erosion, as many of them work in office-based and cognitive professions that AI can perform or replace. These include document analysis, writing, accounting, marketing, and basic programming. Young workers entering the labor market, particularly junior programmers, are already encountering difficulties in securing jobs, a phenomenon that may intensify as smart tools make experienced workers more efficient while reducing demand for entry-level roles.

By contrast, other groups are expected to be more protected and may even benefit from the shift. Manual laborers and skilled tradespeople, such as plumbers, electricians, and technicians, are expected to maintain strong demand. Dabay noted: “Demand in skilled trades is not expected to decline and may even increase.” He added: “Even when the technology matures, a physical robot costs far more than a ChatGPT subscription. Therefore, I don’t think the technology poses as immediate a threat to manual workers as generative AI poses to knowledge workers.”

Israel’s Arab population may also narrow the wage gap relative to the Jewish population by approximately 1% to 2.5%, due to lower representation in occupations most vulnerable to AI disruption. Haredi workers are likewise expected to be less affected than the overall average. Meanwhile, individuals with advanced degrees (MA and PhDs) are projected to enjoy wage increases, owing to the importance of judgment, creativity, and specialized expertise, qualities that are harder to automate.

The researchers caution that these forecasts are conservative. Faster and broader AI adoption could deepen disparities between different groups in the labor market. Since the data predates the public breakthrough of generative AI tools, the real-world impact may already be unfolding more rapidly and more intensely than the model assumes.

The implication is clear: without investment in training, professional retraining, and adaptation of the education system to the evolving labor market, large segments of the workforce risk being left behind.