You and AI: The Future of Work

Professor Joseph E. Stiglitz

AI is more than just the continuation of the process of advances in technology

AI is more than robots which are stronger than humans

AI is more than machines that can process information faster than humans and store and recall information better than humans

AI is about machines that can learn faster than humans

Image courtesy of AFP/Getty Images

In many areas – even quite complicated areas – machines will be able to replace humans

Image courtesy of Otto

In these areas, robots are actually better than humans but problems have been detected.

Their capabilities depend on the data that they are given.

In some areas which seem to require only modest skills, machines have had difficulties…but there has been some progress.

Human Replacing Machines (AI) vs. Human Assisting Machines (IA)

For the intermediate future, only 30 to 40% of jobs are at threat

Machines may also increase the productivity and effectiveness of humans

The balance of the two will depend in part on the extent to which we increase skills in labour force

AI is likely to reduce demand for labor, especially unskilled labour; IA is likely to increase it

In either case, the size of national pie will be larger – increased productivity allows more output from society’s limited resources

Differing impacts of AI and IA on labour markets

Share of National Income

53%  

27%  

11%  

9%  

Current  

Bo+om  90%  

Next  9%  

Next  0.9%  

Top  0.1%  

45%  

27%  

16%  

12%  

Future  

Bo+om  90%  

Next  9%  

Next  0.9%  

Top  0.1%  

Share of Labor, Capital and Rents

62%  

21%  

17%  

Current  

Labor  Share  

Capital  Share  

Rents  Share  

50%  

20%  

30%  

Future  

Labor  Share  

Capital  Share  

Rents  Share  

Image courtesy of National Archives and Records Administration

It depends on government policies

Image courtesy of National Archives and Records Administration

It depends on government policies

With the right government policies in place, there can be full employment and workers can share in the fruits of the enhanced growth

With the wrong government policies, unemployment can increase, and workers can be worse off

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50.00%

100.00%

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300.00% 19

48

1949

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50

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2013

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2017

US: disconnect between productivity and a typical worker’s compensation, 1948-2017

Hourly compensation Net productivity

Source: EPI analysis of unpublished Total Economy Productivity data from Bureau of Labor Statistics (BLS) Labor Productivity and Costs program, wage data from the BLS Current Employment Statistics, BLS Employment Cost Trends, BLS Consumer Price Index, and Bureau of Economic Analysis National Income and Product Accounts

Europe: disconnect in productivity and compensation

Source: Eurostat

Europe: less increase in inequality in some countries than in others

Source: World Wealth and Income Database

0

100000

200000

300000

400000

500000

600000

700000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

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t 201

6 P

PP

Eur

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Average income

France - Top 1% Germany - Top 1% Spain - Top 1% UK - Top 1% France - Bottom 90% Germany - Bottom 90% Spain - Bottom 90% UK - Bottom 90%

The relationship between income inequality and social mobility

Source: Corak (2013); World Bank 2013)

Gini Coefficient of disposable income in 2015 (or latest year) and mid-1980s (when available)

Source: OECD Income Distribution Database.

It is a matter of more than just redistribution – though that’s important

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ENGLAND SCOTLAND WALES NORTHERN IRELAND

MAXIMUM ANNUAL TUITION FEES FOR HOME STUDENTS AT UNDERGRADUATE LEVEL

Basic rules of the game

Policies to increase demand for (unskilled) labour

Improving productivity

Helping restructure economy

Recognizing that important services have to be publicly provided or at least supported

Policies to sustain economy at full employment

Monetary policy focusing on employment as well as inflation

Fiscal policies that don’t suffer from deficit fetishism

Conventional policies may not be enough

With the right policies in place, AI can usher in a new era of shared prosperity, with meaningful work for all those who desire it.