"Should we fear the robot revolution? (The correct answer is yes)"
Advances in artificial intelligence and robotics may be leading to a new industrial revolution. This paper presents a model with the minimum necessary features to analyze the implications for inequality and output. Two assumptions are key: “robot” capital is distinct from traditional capital in its degree of substitutability with human labor; and only capitalists and skilled workers save. We analyze a range of variants that reflect widely different views of how automation may transform the labor market. Our main results are surprisingly robust: automation is good for growth and bad for equality; in the benchmark model real wages fall in the short run and eventually rise, but “eventually” can easily take generations.
Technology optimists do not deny that automation will prove disruptive in the short run. They point out, however, that historically periods of rapid technological change have created more jobs than they have destroyed and have raised wages and per capita income in rough proportion. The AI revolution may be different, but there are good reasons to believe that a resilient, adaptable economy will again vanquish the specter of technological unemployment: income growth raises the demand for labor in sectors that produce non-automatable goods and for workers that perform manual-intensive tasks; higher productivity stimulates investment throughout the economy in cooperating capital inputs; and while automation renders some jobs obsolete, it complements many others, especially jobs that place a premium on creativity, flexibility, and abstract reasoning. (p.118)
KeywordsRobots, Automation, Artificial Intelligence, Prodcution, Employment, Technology, Skill, Growth, Innovation
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