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Economic Growth under Transformative AI

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  • Philip Trammell
  • Anton Korinek

Abstract

Recent advances in AI may herald the near arrival of systems that can automate essentially all work. We review the macroeconomic implications of this scenario, in a framework synthesizing several strands of the relevant literature. Robustly, fully automating production alone (so that machines can self-replicate) would dramatically raise the growth rate and lower the labor share, breaking the Kaldor Facts that have long characterized frontier growth. Automating R&D (so that machines can self-improve) would accelerate the transformation, but may not produce it in isolation. Wages—multiplying exploding output and a plummeting labor share—may rise or fall, depending on the returns to scale, the importance of natural resources, and the direction of technical change.

Suggested Citation

  • Philip Trammell & Anton Korinek, 2023. "Economic Growth under Transformative AI," NBER Working Papers 31815, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31815
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    Cited by:

    1. Anton Korinek & Donghyun Suh, 2024. "Scenarios for the Transition to AGI," NBER Working Papers 32255, National Bureau of Economic Research, Inc.
    2. Carvalho, Carlos & Ferrero, Andrea & Mazin, Felipe & Nechio, Fernanda, 2025. "Reprint of: Demographics and real interest rates across countries and over time," Journal of International Economics, Elsevier, vol. 156(C).
    3. Diane Coyle & John Lourenze Poquiz, 2025. "Making AI Count: The Next Measurement Frontier," NBER Chapters, in: The Economics of Transformative AI, National Bureau of Economic Research, Inc.
    4. Mandon, Pierre Jean-Claude, 2025. "Beyond the AI Divide : A Simple Approach to Identifying Global and Local Overperformers in AI Preparedness," Policy Research Working Paper Series 11073, The World Bank.
    5. Minniti, Antonio & Prettner, Klaus & Venturini, Francesco, 2025. "AI innovation and the labor share in European regions," European Economic Review, Elsevier, vol. 177(C).
    6. Carvalho, Carlos & Ferrero, Andrea & Mazin, Felipe & Nechio, Fernanda, 2025. "Demographics and real interest rates across countries and over time," Journal of International Economics, Elsevier, vol. 157(C).
    7. Francesco Venturini, 2025. "Generative AI and Income Growth: Early Evidence on Global Data," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 31-46.
    8. Huy Tam Phan & Hong Tuyet Pham & Thanh Cuong Nguyen & Tran Phuoc, 2024. "AI Innovation and Economics Growth: A Global Evidence," WSB Journal of Business and Finance, Sciendo, vol. 58(1), pages 198-216.
    9. Jacob Schaal, 2025. "A theory-based AI automation exposure index: Applying Moravec's Paradox to the US labor market," Papers 2510.13369, arXiv.org.
    10. Peeyush Agarwal & Harsh Agarwal & Akshat Rana, 2025. "What Work is AI Actually Doing? Uncovering the Drivers of Generative AI Adoption," Papers 2510.23669, arXiv.org, revised Oct 2025.
    11. Caleb Maresca, 2025. "Strategic Wealth Accumulation Under Transformative AI Expectations," Papers 2502.11264, arXiv.org.
    12. Mark Fisher & John Severini, 2025. "Making AI Inevitable: Historical Perspective and the Problems of Predicting Long-Term Technological Change," Papers 2508.16692, arXiv.org.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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