Artificial Intelligence, Automation, and Work

A non-technical review

Steven Pan

ACEM, SJTU

May 2024

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Review of the impacts of AI on labor market

The impacts of AI are not singular (as in the false dichotomy).

AI and robots will replace human workers because the tasks of
the their jobs can be automated and they lose the comparative
advantages. Known as the Displacement effect.
AI and robots can make performances of higher productivity and
lower cost than human workers, which booster the whole
economy and increase the demand of labor in other
non-automated tasks (jobs). Known as the Productivity effects.
AI and robot raise the demand of capital, which also raise that of
labor. Known as the Capital accumulation.
The Deepening of automation, namely the automation
technologies betters themselves within tasks, will have
productivity effects without displacement effects.

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Review of the impacts of AI on labor market

Aforementioned discussions hold the number of tasks constant.

However, AI and robots may create new tasks where human labor
owns comparative advantages. Known as the Reinstatement
effect.
Negative ones: Displacement effect. Positive (Countervailing)
ones: Productivity effect, Capital accumulation, Deepening of
automation (though can be explained by others) and
Reinstatement effect.
A metaphor: AI takes pieces of cake that previously belongs to
human but it also expands the size of the cake and offers human
new pieces. So the total amount hold by human are not certain
eventually.

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Other factors that bias the impacts

Considering the productivity effects and the reinstatement

effects, workers who lose jobs can hunt for new ones created by
the expanding economy or AI. However, they may fail to meet
the skill requirements of many new jobs thus the matching
process can be exceedingly time-consuming and costly. Known
as the Mismatch between skills and technologies.
Due to the tax bias in US, firms are economic incentives to
utilize automation technologies in task that human have marginal
comparative advantages, making the equilibrium fail to reach the
social optimal one. Known as the Excessive Automation.
Imperfections of the labor market like frictions may also hinder
the positive impacts.

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