The wrong kind of AI? Artificial intelligence and the future of labour demand

TLDR

AI is poised to reshape production, yet recent advances have focused on automation rather than creating new productive tasks for labor. This bias has led to stagnant labor demand, a shrinking labor share of national income, rising inequality, and lower productivity growth.

Abstract

Abstract Artificial intelligence (AI) is set to influence every aspect of our lives, not least the way production is organised. AI, as a technology platform, can automate tasks previously performed by labour or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labour can be productively employed. The consequences of this choice have been stagnating labour demand, declining labour share in national income, rising inequality and lowering productivity growth. The current tendency is to develop AI in the direction of further automation, but this might mean missing out on the promise of the ‘right’ kind of AI, with better economic and social outcomes.