Working Paper: NBER ID: w31815
Authors: Philip Trammell; Anton Korinek
Abstract: Industrialized countries have long seen relatively stable growth in output per capita and a stable labor share. AI may be transformative, in the sense that it may break one or both of these stylized facts. This review outlines the ways this may happen by placing several strands of the literature on AI and growth within a common framework. We first evaluate models in which AI increases output production, for example via increases in capital's substitutability for labor or task automation, capturing the notion that AI will let capital “self-replicate”. This typically speeds up growth and lowers the labor share. We then consider models in which AI increases knowledge production, capturing the notion that AI will let capital “self-improve”, speeding growth further. Taken as a whole, the literature suggests that sufficiently advanced AI is likely to deliver both effects.
Keywords: AI; Economic Growth; Labor Share; Productivity
JEL Codes: E20; E30; E40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AI (C45) | output production (E23) |
| AI (C45) | capital's substitutability for labor (D24) |
| capital's substitutability for labor (D24) | output production (E23) |
| task automation (L23) | output production (E23) |
| AI (C45) | knowledge production (O36) |
| knowledge production (O36) | economic growth (O49) |
| AI (C45) | economic growth (O49) |
| AI (C45) | reduced labor share (E25) |