Broadening the Gains from Generative AI: The Role of Fiscal Policies, Fernanda Brollo et al., International Monetary Fund (IMF), June 17, 2024
The report highlights the potential of generative AI to transform production processes and boost productivity growth while also raising concerns about significant labor disruptions and increasing inequality. Unlike previous technological innovations that automated manual labor, generative AI threatens to displace knowledge economy jobs. The IMF authors recommend that countries reconsider tax incentives that encourage companies to replace human labor and strengthen more generalized capital income taxes to protect the tax base and offset rising wealth inequality. They advise against an AI-specific tax due to the difficulty in defining what qualifies as AI. The report also addresses the substantial climate impact of AI servers and suggests that a carbon tax would be the most efficient way to internalize these external costs. The IMF researchers emphasize the importance of adequate social protection systems to cushion the negative labor market and distributional effects of generative AI. Earlier this year, the IMF estimated that nearly 40% of jobs globally, and up to 60% in advanced economies, will be impacted by AI, ranging from job loss to productivity improvements.
Gen-AI: Artificial Intelligence and the Future of Work, Mauro Cazzaniga et al.,International Monetary Fund (IMF), January 14, 2024
Report discusses the potential impact of artificial intelligence (AI) on the global economy and the need for policies to ensure that AI benefits humanity. The IMF's analysis suggests that almost 40% of global employment is exposed to AI, with advanced economies facing greater risks and opportunities compared to emerging market and developing economies. In advanced economies, about 60% of jobs may be impacted by AI, with half potentially benefiting from AI integration and the other half facing lower labor demand and reduced wages. The article highlights the risk of AI exacerbating income and wealth inequality within countries, as well as the potential for AI to widen the gap between nations. To address these challenges, Georgieva emphasizes the importance of establishing comprehensive social safety nets and offering retraining programs for vulnerable workers. The IMF has developed an AI Preparedness Index to help countries craft the right policies, assessing readiness in areas such as digital infrastructure, human capital and labor market policies, innovation and economic integration, and regulation and ethics. The article concludes by recommending that advanced economies prioritize AI innovation and integration while developing robust regulatory frameworks, while emerging market and developing economies should focus on laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.
Generative AI and the Future of Work in America, McKinsey Global Institute (Kweilin Ellingrud, Saurabh Sanghvi, Gurneet Singh Dandona, Anu Madgavkar, Michael Chui, Olivia White, and Paige Hasebe), July 26, 2023
This report from the McKinsey Global Institute examines the rapid evolution of the US labor market, focusing on the impact of automation, including generative AI, federal investment in infrastructure and the net-zero transition, and long-term structural trends. During the pandemic (2019-2022), the US labor market saw 8.6 million occupational shifts, 50 percent more than in the previous three-year period. By 2030, activities that account for up to 30 percent of hours currently worked across the US economy could be automated, a trend accelerated by generative AI. The report suggests that automation's biggest effects are likely to hit office support, customer service, and food service employment, while STEM, creative, and business and legal professionals will see their work enhanced rather than eliminated. Federal investment in climate, infrastructure, and the net-zero transition will also alter labor demand, shifting employment away from oil, gas, and automotive manufacturing and into green industries, construction, and transportation services. The report estimates that an additional 12 million occupational transitions may be needed by 2030, with workers in lower-wage jobs being up to 14 times more likely to need to change occupations than those in the highest-wage positions. Women are also 1.5 times more likely to need to move into new occupations than men. To address these challenges, the report recommends workforce development on a larger scale, more expansive hiring approaches from employers, and tackling structural issues such as the need for affordable childcare and broader partnerships for reskilling.
The Potentially Large Effects of Artificial Intelligence on Economic Growth, Julian Briggs and Rachana Kodnani, Goldman Sachs, March 2023
According to Goldman Sachs Research, breakthroughs in generative artificial intelligence (AI) have the potential to significantly impact the global economy. The economists Joseph Briggs and Devesh Kodnani estimate that the adoption of AI tools using advanced natural language processing could lead to a 7% (or nearly $7 trillion) increase in global GDP and boost productivity growth by 1.5 percentage points over a 10-year period. The report also suggests that AI systems may have a major impact on employment markets worldwide, with the equivalent of 300 million full-time jobs potentially exposed to automation. However, most jobs and industries are only partially exposed to automation and are more likely to be complemented rather than replaced by AI. Historically, jobs displaced by automation have been offset by the creation of new jobs and occupations, accounting for the majority of long-run employment growth. The report also highlights the far-reaching implications of AI advances for the global enterprise software, healthcare, and financial services industries. While the long-term effects of generative AI on the world economy and society remain uncertain, the report suggests that the impact could be profound.