ABSTRACT
This chapter looks at various empirical and theoretical studies on the impact of robotization on the economy and the labour market with a view to get an idea of how robotization will influence employment, wages, per capita income, and poverty in the not-too-distant future. While robotization does displace humans from their jobs, this very displacement does generate positive tendencies: wage reduction, which stimulates employment in non-robotizing sectors, and enhancement of labour productivity, which increases employment through an increase in the scale of output. Moreover, as it is a type of automation, robotization creates new machines, with the opportunity to coordinate such machines to provide new products/services, possibly giving rise to new job titles and thus jobs. But flexibility of the existing robotized technology to use available machines for carrying out inventions and innovations reduces the window of opportunity available to humans for coordinating machines. As of now, some flexible technologies already exist, such as Robot Operating System and Microsoft Windows.
Empirical data also indicates that rising unemployment and wage reduction characterize segments of both the skilled and unskilled labour force. Occupations that require the use of soft and fuzzy skills such as the ability to manage people and engage in communication laced with empathy and positive emotions as well as others which require complex limb movements should continue to remain the preserve of humans.
In regard to growth of per capita income, the AI revolution is leading to a decline in resource intensity of output of many services and therefore a decline in demand facing resource-providing sectors. This tendency can actually reduce the growth rate of per capita income and have negative implications for welfare levels. On the other hand, there is also the increase in the volume of free services for consumers in the AI age, which do not get reflected in GDP estimates but have significant positive implications for welfare. Thus, the difference between the growth rates of per capita income in the pre-AI and AI era, respectively, shows an upward bias. Another important tendency observed in the AI age is the enhanced speed of conducting and disseminating research, which in turn should speed up technological progress and the rate of growth of per capita income. The possible decline in human employment can however counter the impact of this development as it tends to reduce aggregate demand, the basis for output creation. At the same time, there are channels through which AI has a salutary impact on aggregate demand: it can enhance the time available for consumption by catalyzing the shortening of the workweek and it shortens the amount of time needed to complete transactions, which also makes it worthwhile for consumers/beneficiaries to undertake an enhanced number of transactions.
