Artificial intelligence (AI) is expected to significantly reshape the global economy, with potential impacts on labor markets, productivity, and inequality. Advanced economies are more exposed to AI and may benefit more from its adoption than emerging market and developing economies. AI exposure varies across occupations, with some roles at higher risk of displacement and others benefiting from AI's complementarity. Labor income inequality may increase if AI complements high-income workers, while capital returns could exacerbate wealth inequality. However, if productivity gains are substantial, income levels could rise for most workers. Advanced economies and more developed emerging market economies should focus on regulatory frameworks and labor reallocation, while emerging market and developing economies should prioritize digital infrastructure and skills development. AI's impact on income and wealth inequality is complex, as it may affect both high- and low-skilled workers. College-educated workers are better prepared to adapt to AI-driven changes, while older workers may face greater challenges. AI adoption could lead to significant productivity gains, but its effects on employment and income depend on factors such as skill levels, education, and age. The note highlights the importance of policies that support labor adaptability, retraining, and social safety nets to ensure inclusive growth in the AI era.Artificial intelligence (AI) is expected to significantly reshape the global economy, with potential impacts on labor markets, productivity, and inequality. Advanced economies are more exposed to AI and may benefit more from its adoption than emerging market and developing economies. AI exposure varies across occupations, with some roles at higher risk of displacement and others benefiting from AI's complementarity. Labor income inequality may increase if AI complements high-income workers, while capital returns could exacerbate wealth inequality. However, if productivity gains are substantial, income levels could rise for most workers. Advanced economies and more developed emerging market economies should focus on regulatory frameworks and labor reallocation, while emerging market and developing economies should prioritize digital infrastructure and skills development. AI's impact on income and wealth inequality is complex, as it may affect both high- and low-skilled workers. College-educated workers are better prepared to adapt to AI-driven changes, while older workers may face greater challenges. AI adoption could lead to significant productivity gains, but its effects on employment and income depend on factors such as skill levels, education, and age. The note highlights the importance of policies that support labor adaptability, retraining, and social safety nets to ensure inclusive growth in the AI era.