CONCEPT
The Citizenship Premium
Milanovic's empirical finding that national location explains more variation in individual lifetime income than education, occupation, or any individual characteristic — the institutional rent that geography extracts, and that AI amplifies rather than erodes.
The citizenship premium is the additional income a person earns simply by being located in a wealthy country, holding individual characteristics constant. Milanovic's decomposition of global income variation found that location explains approximately sixty percent of the differences in individual lifetime income worldwide — a larger share than any personal attribute the labor economics tradition typically measures. The premium is not a reward for individual merit. It is a rent derived from institutional quality: legal systems, financial infrastructure, educational access, reliable utilities, proximity to capital markets. In the AI context, the democratization of tools was expected to erode this premium by equalizing capability. The opposite is occurring: AI tools amplify institutional differences multiplicatively, widening rather than narrowing the gap between workers with equivalent nominal capability in different institutional environments.
In The You On AI Field Guide
The premium operates through mechanisms that are invisible to the individual experiencing them. A developer in Lagos with AI tools produces output