GenAI – Will Workers Disappear?

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Many recent headlines predict that the current iterations of genAI will result in significant job decreases – potentially resulting in a 20% unemployment rate in the US. Large companies are ‘warning’ about layoffs. But can these predictions prove to be true? Economics research on similar past phenomena and situations suggests no.

Automation

GenAI, from an economic perspective, is most closely related to automation. Automation is the use of machines to do certain jobs that have been typically done by people. The issue of automation has been most talked about in the context of manufacturing automation, and more recently discussed in the context of self-driving vehicles.

Anecdotally, we know that automation did impact economies (such as the declining number of manufacturing workers over the last several decades), but also did not result in massive unemployment and upheaval in the labor markets.However, in order to understand how automation has impacted the labor force and the macroeconomy, especially in order to predict the outcomes of AI, it is important to model it. A model will allow us to think through the implications of automation and estimate its impact.

Naturally, there hasn’t been much economic research specifically talking about the new AI technologies and how they will impact the economy. However, there have been discussions and research conducted on similar past phenomena and situations that we can use to apply to this particular scenario.

What is Automation

The first issue to consider is what exactly is automation. One way to think about it is that it is something that can do a particular job. However, jobs are usually very vaguely defined or entail a broad set of activities. For example, the titles engineer, construction worker, or consultant do not give us any specifics of what these people actually do. Thus, economists decided to approach this issue through the lens of ‘tasks’.Tasks are more specific activities performed by individuals. Some examples of task-based roles are “typists”, “cashiers”,