AUTOMATION IN ARTIFICIAL INTELLIGENCE AND ITS EFFECT ON ECONOMY Posted on : Jul 07 - 2021

Automation in artificial intelligence has an extensive effect on the economy.

Industrialists and giant companies all over the world are further adapting to the idea of automation in artificial intelligence. In India, technological progress, is the main driver of growth of GDP per capita, allowing output to increase faster than labor and capital. Technology increases productivity by decreasing the number of labor hours needed to create a unit of output. An increment in labor productivity generally translates into increases in average wages, allowing workers to cut back on work hours and to afford more goods and services. AI should be welcomed for its potential economic benefits. Those economic benefits, however, will not necessarily be evenly distributed across society.

At present, it may be challenging to predict exactly which jobs will be most immediately affected by AI-driven automation. Because AI is not a single technology, but rather a collection of technologies that are applied to specific tasks, the effects of AI will be felt unevenly throughout the economy. Some tasks will be more easily automated than others, and some jobs will be affected more than others—both negatively and positively. Some jobs may be automated away, while for others, AI-driven automation will make many workers more productive and increase demand for certain skills. Finally, new jobs are likely to be directly created in areas such as the development

and supervision of AI as well as indirectly created in a range of areas throughout the economy as higher incomes lead to expanded demand.

Recent research suggests that the effects of AI on the labor market in the near term will continue the trend that computerization and communication innovations have driven in recent decades. Researchers’ estimates on the scale of threatened jobs over the next decade or two range from 9 to 47 percent. For context, every 3 months about 6 percent of jobs in the economy are destroyed by shrinking or closing businesses, while a slightly larger percentage of jobs are added resulting in rising employment and a roughly constant unemployment rate. The economy has

repeatedly proven itself capable of handling this scale of change, although it would depend on how rapidly the changes happen and how concentrated the losses are in specific occupations that are hard to shift from.

Effect of AI Automation in Macroeconomy

Productivity

Technology increases productivity by decreasing the number of labor hours needed to create a unit of output. Labor productivity increases generally translate into increases in average wages, allowing workers to cut back on work hours and to afford more goods and services. Living standards and leisure hours could both increase, although

to the degree that inequality increases—as it has in recent decades—it offsets some of those gains. View More