AI's Impact on Global Economic Conversations

Impressive new paper out led by A/Professor Jo-An Occhipinti (née Atkinson) I was glad to contribute. "Work is fundamental to societal prosperity and mental health, providing financial security, a sense of identity and purpose, and social integration. Job insecurity, underemployment and unemployment are well-documented risk factors for mental health issues and suicide. The emergence of generative artificial intelligence (AI) has catalysed debate on job displacement and its corollary impacts on individual and social wellbeing. Some argue that many new jobs and industries will emerge to offset the displacement, while others foresee a widespread decoupling of economic productivity from human input threatening jobs on an unprecedented scale. This study explores the conditions under which both may be true and examines the potential for a self-reinforcing cycle of recessionary pressures that would necessitate sustained government intervention to maintain job security and economic stability. A system dynamics model was developed to undertake ex ante analysis of the effect of AI-capital deepening on labour underutilisation and demand in the economy using Australian data as a case study. Results indicate that even a moderate increase in the AI-capital-to-labour ratio could increase labour underutilisation to double its current level, decrease per capita disposable income by 26% (95% interval, 20.6–31.8%), and decrease the consumption index by 21% (95% interval, 13.6–28.3%) by mid-2050. To prevent a reduction in per capita disposable income due to the estimated increase in underutilization, at least a 10.8-fold increase in the new job creation rate would be necessary. Results demonstrate the feasibility of an AI-capital-to-labour ratio threshold beyond which even high rates of new job creation cannot prevent declines in consumption. The precise threshold will vary across economies, emphasizing the urgent need for empirical research tailored to specific contexts. This study underscores the need for cross-sectoral government measures to ensure a smooth transition to an AI-dominated economy to safeguard the Mental Wealth of nations." https://lnkd.in/gq_ZjWDs

New research from Morgan Stanley reveals the transformative potential of #GenerativeAI in reshaping the job landscape. The study suggests that AI could influence over 40% of occupations in the coming years, potentially resulting in $4.1 trillion in associated costs within the next three years—a seismic shift with profound implications for the global economy. While predicting the precise impact of this transition remains challenging, it is evident that generative AI will increasingly augment or automate various roles. The key to preparedness lies in ensuring that workers have the skills and tools necessary to succeed in this evolving landscape. As AI integration becomes commonplace across industries, organizations investing in employee training for AI utilization are poised to thrive in this new era. Explore their findings for a more in-depth analysis of AI's impact on the labor market.

IMO economists tend to be too blasé about the impact of AI on the labor market. That’s because it is generally held that new tech tends to add as many or more jobs as it displaces. I am not so sure that will be the case with AI – or even if it is, it may not be the case for some time. It is true that there is not a lot of hard data (yet) to support the claim that AI is replacing a number of jobs, or is the primary driver of the current low hiring rate, or is driving weakness in the white collar and new grad workforce… but there are plenty of anecdotes that it is making an impact. Just listen to CEO commentary, or look at research coming out of the AI companies themselves of how their products are being used (perhaps with some temperance), or check out reddit… Or if you want to read what economists read, just look through the Fed’s latest Beige Book: “Multiple other business contacts reported increased use of artificial intelligence (AI), with one contact saying AI replaced some call center employees, and another contact noting how AI led to a reduction in accounting jobs.” “A growing number of employers, across diverse industries, sought to increase labor productivity using AI and other technologies, reducing the need for hiring.” “Some organizations noted utilizing artificial intelligence (AI) to improve efficiency and help cut costs. They noted various AI use cases such as performing human resources tasks, conducting research, analyzing data, taking notes, and proofing documents.” The reason why it matters is because if AI is indeed starting to impact the labor market in a meaningful way  – especially, in the white collar segments – and reducing the need for hiring, it means the risk to the economy may be much greater if the growth slows, layoffs start to pickup, and white collar workers find it even more challenging to find their way back to work. #economics 

AI exposure and impact on Jobs: Good & Bad - We need better preparation and execution. Just watched a thought-provoking video by Gita Gopinath, the Deputy Managing Director of the IMF, speaking from Davos at the World Economic Forum on the impact of Artificial Intelligence on the global job market. The IMF's recent research indicates a staggering 40% of jobs worldwide are now exposed to AI, with this figure soaring to 60% in the US. However, for lower-income countries, it dips to 26%. This exposure, as Gita aptly points out, is a double-edged sword. On the bright side, AI promises to boost worker productivity, a leap forward in efficiency and capability. But, it also poses a significant risk of displacing workers. As an HR tech entrepreneur and an evangelist for AI Workforce Transformation, I see this as a crucial juncture. The development and application of AI aren't set in stone. It's a path we're carving out, day by day. Gita's emphasis on the need for global cooperation and policy-making in this domain resonates deeply with me. AI is borderless, and so should be our approach in harnessing its potential while safeguarding our workforce especially in developing countries. We need strategies that not only bring AI's capabilities but also ensure that this technological revolution benefits humanity as a whole. This calls for a transformation in how we view and prepare our workforce. Upskilling and reskilling should be at the forefront of our HR strategies. We must create an ecosystem where humans and AI collaborate, enhancing each other's strengths. At iMocha & Revature this is our core offering to find skill gap and guiding them for #upskilling & #reskilling to create Future Ready Workforce and elevate their career progress using #Skillsintelligence I take this as an opportunity to urge all Founders, CXOs, HR Leaders in shaping a future where AI is not just a disruptor but a powerful ally in driving human potential and prosperity. Amit D Mishra Sujit Karpe Dave Ghosh Maansi Sanghi Vishal Pradhan Vishal Madan Ashwin Bharath Vidya Shankaran Anurag Gupta Vicente Pava #AIWorkforceTransformation #FutureOfWork #HumanAIcollaboration #HRtech #Davos2024 #GitaGopinath

What have we learned in the six months since we published "The economic potential of generative AI"? Here's five ideas for what we would we update: 1. It's big everywhere. Yes it is likely right that the impact on the technology industry is 5x the impact on chem & ag, or insurance, but it is being adopted in every industry. Some of the industries that are smaller in our analysis are still fast adopters. 2. "Swiss army knife". The biggest economic driver is how easy it is to deploy in many different applications, rather than the need to build a new model for each application. This is what is lowering costs and driving democratization. 3. More versatile than we thought. We've stopped writing "it's not good at applications which depend on math rather than on language." It's amazing how well it can now handle a broad range of problems, and how well some people have combined it with more traditional forms of AI to extend it's versatility 4. Revenue as well as cost. The growth oriented business cases are as exciting, and in some cases faster than the productivity oriented ones. 5. If you think it is "overhyped", you might be under-ambitious. Of course it is overhyped in some ways, what new technology is not? But we are seeing the difference between who has impact from it in their P&L in 2024 versus who is still in pilots, is whether you took a top-down view to reimagine a domain of your business ("Rewired") versus whether you just prioritized and built some applications to see what would happen. #mckinseydigital #quantumblack #rewiredbook #generativeai https://lnkd.in/eH6MJTUR

A report from McKinsey & Company reveals that Generative AI could potentially contribute up to $4.4 trillion to the global economy annually in the upcoming years and will automate nearly all types of work between 2030 and 2060. Challenging conventional beliefs, the report emphasises that AI will have a particularly pronounced effect on higher-wage and highly-educated knowledge workers. While such jobs were once considered to have minimal automation potential, the study reveals that the higher the educational level, the more significant the influence of AI technology. According to the report, the areas most likely to be affected include: 🔹 Sales 🔹 Operations 🔹 Marketing 🔹 Software Engineering The study suggests that automation will likely gain momentum faster in affluent nations, primarily because higher wages make it economically viable in the short run. Conversely, countries with lower wages, such as China, India, and Mexico, are forecasted to embrace automation at a slower pace compared to their higher-wage counterparts, like the USA and Germany. Although stringent regulations are undoubtedly on the horizon, the transformative impact of Generative AI is profound and will undeniably shape the landscape of our future work environment.

These new stats on AI’s impact on jobs made me sit up and pay attention: 40% of jobs across the globe could be affected by the rise of AI, according to new research from the International Monetary Fund (IMF). 60% of the jobs impacted will be in “high-income” nations. The researchers adapted a commonly used conceptual framework from past studies to measure what human work will be exposed to AI. When looking across all jobs, high-income nations were most exposed to AI transformation. Why? They theorize that emerging markets and low-income countries don’t have the infrastructure of skilled workers to harness the immediate benefits of AI. Overall, the research paints a picture of big winners and big losers—with little space in-between: Some workers in high-income countries will capture huge productivity gains and benefit financially from the technology. Others will see AI lower demand for their labor and possibly even eliminate their jobs. And lower-income countries unable to fully leverage AI may lose out to higher-income countries that can. This is just one study. And you need to take any AI employment study with a grain of salt. But it’s increasingly clear to me we need to pay serious attention here: AI is already changing the work we do, the value we create, and expectations around employment—and AI moves FAST. Tomorrow’s employment picture could be very different from today’s. https://lnkd.in/gBtSntmv #ai #marketing #business

Thrilled to share my latest working paper (with Carlo Pizzinelli, Marina Mendes Tavares, Mauro Cazzaniga, and Longji Li). ✳The paper examines the impact of Artificial Intelligence (AI) on labor markets in both Advanced Economies (AEs) and Emerging Markets (EMs). ✳We propose an extension to a standard measure of AI exposure, accounting for AI's potential as either a complement or a substitute for labor, where complementarity reflects lower risks of job displacement. ✳We analyze worker-level microdata from 2 AEs (US and UK) and 4 EMs (Brazil, Colombia, India, and South Africa), revealing substantial variations in unadjusted AI exposure across countries. ✳AEs face higher exposure than EMs due to a higher employment share in professional and managerial occupations. ✳However, when accounting for potential complementarity, differences in exposure across countries are more muted. Within countries, common patterns emerge in AEs and EMs. ✳Women and highly educated workers face greater occupational exposure to AI, at both high and low complementarity. ✳Workers in the upper tail of the earnings distribution are more likely to be in occupations with high exposure but also high potential complementarity.

OpenAI CEO Sam Altman has joined Meta Platforms’ Mark Zuckerberg in warning about the threat of AI to jobs and the economy. Altman thinks GPT-4 has lulled people into thinking AI is not a threat. During a panel on AI and geopolitics at the Brookings Institute, Altman highlighted the need for more serious discussions about AI’s impact on the economy. “The thing I’m most worried about right now is, the sort of, the speed and magnitude of the socioeconomic change may have, and what the impacts on what that will be.” Altman cited the lack of a noticeable economic impact from GPT-4, a language model powering ChatGPT, as a reason for the diminished concern. “GPT-4 didn’t have this huge detectable impact on the economy, and so people were kind of like, “Oh well, we were too worried about that, and that’s not a problem.” He warned that failing to address these issues could have massive consequences. “I have a fear that we just won’t take that one seriously enough going forward, and it’s a massive, massive issue.”