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AI and Jobs: the role of demand

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  • James Bessen

Abstract

Artificial intelligence (AI) technologies will automate many jobs, but the effect on employment is not obvious. In manufacturing, technology has sharply reduced jobs in recent decades. But before that, for over a century, employment grew, even in industries experiencing rapid technological change. What changed? Demand was highly elastic at first and then became inelastic. The effect of artificial intelligence on jobs will similarly depend critically on the nature of demand. This paper presents a simple model of demand that accurately predicts the rise and fall of employment in the textile, steel and automotive industries. This model provides a useful framework for exploring how AI is likely to affect jobs over the next 10 or 20 years.

Suggested Citation

  • James Bessen, 2018. "AI and Jobs: the role of demand," NBER Working Papers 24235, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24235
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    Cited by:

    1. Songul Tolan & Annarosa Pesole & Fernando Martinez-Plumed & Enrique Fernandez-Macias & José Hernandez-Orallo & Emilia Gomez, 2020. "Measuring the Occupational Impact of AI: Tasks, Cognitive Abilities and AI Benchmarks," JRC Working Papers on Labour, Education and Technology 2020-02, Joint Research Centre (Seville site).
    2. Gries, Thomas & Naudé, Wim, 2018. "Artificial Intelligence, Jobs, Inequality and Productivity: Does Aggregate Demand Matter?," IZA Discussion Papers 12005, Institute of Labor Economics (IZA).
    3. Eric J. Bartelsman, 2019. "From New Technology to Productivity," European Economy - Discussion Papers 2015 - 113, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Nieddu, Marcello & Bertani, Filippo & Ponta, Linda, 2021. "Sustainability transition and digital trasformation: an agent-based perspective," MPRA Paper 106943, University Library of Munich, Germany.
    5. Filippo Bertani & Marco Raberto & Andrea Teglio, 2020. "The productivity and unemployment effects of the digital transformation: an empirical and modelling assessment," Review of Evolutionary Political Economy, Springer, vol. 1(3), pages 329-355, November.
    6. Naude, Wim & Dimitri, Nicola, 2018. "The race for an artificial general intelligence: Implications for public policy," MERIT Working Papers 2018-032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Naude, Wim, 2018. "Structural transformation in Africa: New technologies, resurgent entrepreneurship and the revival of manufacturing," MERIT Working Papers 2018-045, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Santos, Sergio & Kissamitaki, Maritsa & Chiesa, Matteo, 2020. "Should humans work?," Telecommunications Policy, Elsevier, vol. 44(6).
    9. Wim Naudé, 2019. "New Technology, Entrepreneurship and the Revival of Manufacturing in Africa: Opportunities for Youth and Women?," Working Papers idrcdpru4ir, University of Cape Town, Development Policy Research Unit.
    10. Colombo, Emilio & Mercorio, Fabio & Mezzanzanica, Mario, 2019. "AI meets labor market: Exploring the link between automation and skills," Information Economics and Policy, Elsevier, vol. 47(C), pages 27-37.
    11. Mutascu, Mihai, 2021. "Artificial intelligence and unemployment: New insights," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 653-667.
    12. Geiger, Niels & Prettner, Klaus & Schwarzer, Johannes A., 2018. "Automatisierung, Wachstum und Ungleichheit," Hohenheim Discussion Papers in Business, Economics and Social Sciences 13-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    13. Bertin Martens & Songul Tolan, 2018. "Will this time be different? A review of the literature on the Impact of Artificial Intelligence on Employment, Incomes and Growth," JRC Working Papers on Digital Economy 2018-08, Joint Research Centre (Seville site).
    14. Genz, Sabrina & Schnabel, Claus, 2021. "Digging into the digital divide: Workers' exposure to digitalization and its consequences for individual employment," Discussion Papers 118, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    15. Bertani, Filippo & Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2021. "Digital Innovation and its Potential Consequences: the Elasticity Augmenting Approach," MPRA Paper 105326, University Library of Munich, Germany.
    16. Wiljan van den Berge, 2019. "Automatic Reaction – What Happens to Workers at Firms that Automate?," CPB Discussion Paper 390.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    17. David Klenert & Enrique Fernandez-Macias & Jose-Ignacio Anton, 2020. "Do robots really destroy jobs? Evidence from Europe," JRC Working Papers on Labour, Education and Technology 2020-01, Joint Research Centre (Seville site).
    18. Maria-Chiara Morandini & Anna Thum-Thysen & Anneleen Vandeplas, 2020. "Facing the Digital Transformation: Are Digital Skills Enough?," European Economy - Economic Briefs 054, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    19. Tubadji, Annie & Huang, Haoran & Webber, Don J, 2021. "Cultural proximity bias in AI-acceptability: The importance of being human," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    20. Fatima, Samar & Desouza, Kevin C. & Dawson, Gregory S., 2020. "National strategic artificial intelligence plans: A multi-dimensional analysis," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 178-194.
    21. Gries, Thomas & Naudé, Wim, 2021. "The Race of Man and Machine: Implications of Technology When Abilities and Demand Constraints Matter," IZA Discussion Papers 14341, Institute of Labor Economics (IZA).
    22. Naudé, Wim, 2018. "Brilliant Technologies and Brave Entrepreneurs: A New Narrative for African Manufacturing," IZA Discussion Papers 11941, Institute of Labor Economics (IZA).
    23. Wiljan van den Berge, 2019. "Automatic Reaction – What Happens to Workers at Firms that Automate?," CPB Discussion Paper 390, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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