{"id":4631,"date":"2024-10-08T10:02:29","date_gmt":"2024-10-08T08:02:29","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=4631"},"modified":"2024-10-08T10:02:29","modified_gmt":"2024-10-08T08:02:29","slug":"artificial-intelligence-can-enhance-human-labour","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/10\/08\/artificial-intelligence-can-enhance-human-labour\/","title":{"rendered":"Artificial Intelligence Can Enhance Human Labour"},"content":{"rendered":"<p><i><span style=\"font-weight: 400;\">Will AI manage to revive the sluggish economic growth seen over the past twenty years? From the benefits to the risks for labour and citizens&#8217; well-being to the role of public policies in the new context, the only certainty seems to be uncertainty. Here\u2019s a brief inventory of what we know so far about the technology that\u2019s on everyone&#8217;s lips today.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Artificial intelligence has been at the center of public attention since the American company OpenAI made its ChatGPT system available online two years ago. This system is capable of generating coherent content in response to any question from internet users. But what can AI do for economic growth? The answer is closely tied to its effect on labour productivity, that is, AI&#8217;s ability to assist or replace human labour in productive activities.<\/span><\/p>\n<h3><b>Stagnant Productivity<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Historically, productivity increases have always been the key to sustaining economic development and workers&#8217; incomes. Over the past twenty years, despite the spread of digital technologies, income and well-being growth in advanced economies have been hindered by weak productivity trends. In OECD countries, its annual growth rate has progressively decreased from around 2% in the 1970s and 1990s to 1% in the 2000s. In Italy, the extremely low productivity growth since the beginning of the century has had serious consequences for the population, whose average income has lost more than 10% of its purchasing power compared to other advanced countries. So what can AI do for growth and well-being? The issue is widely debated, but for now, uncertainty reigns supreme due to the limited evidence available and the difficulty of making predictions about the future of a technology that evolves extremely rapidly. Let&#8217;s try to take stock of the debate.<\/span><\/p>\n<h3><b>AI, Labour Productivity, and Innovation<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">What do we know about AI&#8217;s effect on productive activities? The evidence is still scarce and fragmented, but Figure 1 illustrates the most recent findings. The red bars show productivity increases observed in companies in different countries that use or develop predictive AI, while the blue bars indicate the consequences of using generative AI in various professional activities. The data refer respectively to business activity and the execution of specific tasks by workers, but it is clear that using generative AI spectacularly improves performance (between 10% and 60%), therefore having a much stronger potential effect on business productivity compared to predictive AI (increases between 2% and 10%).<\/span><\/p>\n<p><b>Figure 1 \u2013 Impact of AI on Business Productivity and Worker Performance<\/b><\/p>\n<figure id=\"attachment_4632\" aria-describedby=\"caption-attachment-4632\" style=\"width: 640px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4632 size-large\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-1024x787.png\" alt=\"\" width=\"640\" height=\"492\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-1024x787.png 1024w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-300x231.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-768x591.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-1536x1181.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-2048x1575.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_1-600x461.png 600w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><figcaption id=\"caption-attachment-4632\" class=\"wp-caption-text\">Note: The graph shows in the panel above (purple bars) the productivity gains recorded by companies following the development, use, or possession of predictive AI patents and in the panel below (green bars) the productivity gains obtained by workers in the execution of certain tasks (indicated on the horizontal axis) following the use of generative AI. Source: Authors&#8217; elaboration from Filippucci F., Gal P., Jona-Lasinio C., Leandro A., Nicoletti G. 2024. \u201cThe Impact of Artificial Intelligence on Productivity, Distribution and Growth: Key Mechanisms, Initial Evidence and Policy Challenges\u201d. OECD, Paris.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Moreover, AI raises hopes for the economy as a whole based on the belief that it is a technology of vast application in all production processes\u2014much like the internal combustion engine, electricity, or computers in the past\u2014but also capable of accelerating the production of ideas and innovation, which are the lifeblood of the economy. AI also has some peculiar characteristics compared to previous digital technologies, starting with a lesser dependence on human inputs and the ability to learn autonomously and improve its performance over its applications. Consequently, its use can lead to new scientific inventions, new techniques, and new products with increasing independence and accuracy. There are already concrete examples of this in the fields of biological research, pharmaceuticals, and materials science.<\/span><\/p>\n<h3><b>Opportunities and Obstacles<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">How can we transform the productivity increases observed in some companies and activities into growth for the overall economy? Here, expert opinions diverge because, as seen in Figure 2, the effects of artificial intelligence depend on four main factors: the speed of its diffusion among companies, the number of productive activities to which it can be effectively applied, its ability to assist or automate human labour, and in the case of automation, the economy&#8217;s ability to redeploy displaced workers to other productive activities.<\/span><\/p>\n<p><b>Figure 2 \u2013 Effects of AI on Productivity: From Companies to the Entire Economy<\/b><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-4634\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-916x1024.png\" alt=\"\" width=\"640\" height=\"715\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-916x1024.png 916w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-268x300.png 268w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-768x858.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-1375x1536.png 1375w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-1833x2048.png 1833w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-300x335.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_2-600x670.png 600w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><span style=\"font-weight: 400;\">Some analysts argue that with a good level of diffusion, use, and impact on labour, AI could generate 1.5 percentage points of annual growth rates over the next two decades. Others believe the consequences for growth will be much smaller, around 0.1% per year and perhaps short-lived, as was the case for IT technologies in the 1990s. Thus, there is broad consensus on the potentially positive effect on economic and social growth, but its magnitude and duration remain very uncertain, partly due to the lack of data on the actual use of the newly arrived generative AI. Available information indicates that its spread in advanced economies is still very limited. For example, census data for the United States, the country where AI was created and where the broadest expansion is expected, indicates that only 5% of the entire business universe uses it. OECD surveys covering a smaller number of companies in each country estimate that, on average, 8% of companies (mostly large ones) use it, with Italy at 5%. There are still no comprehensive assessments of the percentage of workers in different sectors whose tasks could be replaced or improved by AI\u2014that is, who are more &#8220;exposed&#8221; to productivity improvements or layoffs caused by new technology applications (see also the graph of the month in this issue). For predictive AI, Figure 3 shows that workers in high-knowledge-intensive services such as finance, IT, or business services, including research and development, are most at risk. But if generative AI applications were to spread rapidly and be used in conjunction with robotics (e.g., for driving and monitoring industrial machinery or in transport), the range of exposed workers could significantly increase.<\/span><\/p>\n<p><b>Figure 3 \u2013 Workers Exposed to Predictive AI Use in Various Productive Activities in the United States (%)<\/b><\/p>\n<figure id=\"attachment_4636\" aria-describedby=\"caption-attachment-4636\" style=\"width: 640px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4636 size-large\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-764x1024.png\" alt=\"\" width=\"640\" height=\"858\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-764x1024.png 764w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-224x300.png 224w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-768x1029.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-1147x1536.png 1147w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-1529x2048.png 1529w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-300x402.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/10\/Nicoletti_3-600x804.png 600w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><figcaption id=\"caption-attachment-4636\" class=\"wp-caption-text\">Source: Authors&#8217; elaboration from \u201cJobs of Tomorrow: Large Language Models and Jobs\u201d. WEF White Papers, September 2023.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">However, even in a scenario of rapid AI diffusion and increasing workforce exposure to its developments, the effects on growth and well-being would depend on two factors influenced in part by public policies. Firstly, on the extent to which AI development\u2014also guided by incentives and regulations\u2014will focus on improving rather than replacing human skills. At least in the United States, there are relatively few economic sectors where the former prevails today. Secondly, on the economy&#8217;s ability\u2014through the education system, training, unemployment reintegration policies, and labour market dynamism\u2014to update workers&#8217; skills and re-employ those who lose their jobs due to AI-induced automation in other productive activities. If artificial intelligence primarily focused on automation or if skills were not quickly updated, in the worst-case scenario, workers &#8220;freed&#8221; by AI or unable to use it would become inactive, reducing the economy&#8217;s productive potential. In the best-case scenario, these workers would be employed in other, probably less productive, activities. Advanced economies have already experienced this phenomenon when the automation of high-productivity industrial activities combined with saturated demand for manufactured goods shifted workers from manufacturing to services, which suffer from slower productivity dynamics and have partly hindered overall economic growth. Similarly, if AI mainly focused on automation and pushed labour towards less productive activities, its impact on growth and incomes could be limited by the increasing share of employment in less AI-exposed sectors\u2014such as high-labour-intensity personal services like leisure and healthcare\u2014where productivity and wages grow more slowly. This would be particularly true if demand for AI-generated products did not grow rapidly and sustainably.<\/span><\/p>\n<h3><b>The Challenges for Businesses<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The path linking AI to growth is also strewn with other economic obstacles. For example, integrating AI into production processes requires significant investments in data (for system training in specific application areas), material (such as specialised high-performance computing systems), and support IT services (such as cloud computing), which take time and organisational capacity to use efficiently. Not all companies have the resources and managerial talent to achieve this, especially in countries like Italy where micro-enterprises dominate. Moreover, the production of dedicated chips and the specialised technical skills needed for AI development and use are concentrated in certain companies and geographic areas (discussed in the first and second issues of Eco), with the risk that increasing demand could create barriers that may hinder its spread. Finally, the growing use of generative AI in the economy relies on the development of an ever-larger network of data centers whose high energy consumption risks saturating and clogging energy production and distribution with significant repercussions on the rest of the economy and the environment.<\/span><\/p>\n<h3><b>The Role of Public Policies<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The future impact of AI on growth, incomes, and well-being also depends on how public policies address the resulting economic and social risks. The most serious of these is undoubtedly competition. The advantage accumulated by some large companies in developing and commercialising AI systems could increase disproportionately due to the scale returns linked to data and computing power, making them immune to competitive pressures. This would hinder the reduction of AI prices necessary for its widespread adoption and could also limit its qualitative improvement as companies without competitors would have fewer incentives to innovate. This would not only harm companies and consumers using AI but also economic growth. As discussed in a previous issue of Eco, both in competition and social risk fields, the European Union has reacted much faster than other world regions to AI development by enacting wide-ranging directives (the Digital Markets Act, the Digital Services Act, and the AI Act). The effects will be seen in the coming years. But the challenge for public authorities is to keep pace with new technology and regulate it flexibly enough to adapt to its continuous innovations without reducing its positive growth effects by inadvertently hindering its development and dissemination with overly restrictive rules.<\/span><\/p>\n<p><em><b>Bio<\/b><\/em><\/p>\n<p><em><span style=\"font-weight: 400;\">Cecilia Jona-Lasinio is a full professor of applied economics at the LUISS Business School in Rome. She is also a senior economic advisor for the OECD&#8217;s economics department.<\/span><\/em><\/p>\n<p><em><span style=\"font-weight: 400;\">Giuseppe Nicoletti is a senior fellow at the LUISS Lab of European Economics and a non-resident fellow at the Institute for European Policy at Bocconi University. He headed the structural policy analysis division at the OECD&#8217;s economics department.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Will AI manage to revive the sluggish economic growth seen over the past twenty years? From the benefits to the risks for labour and citizens&#8217; [&hellip;]<\/p>\n","protected":false},"author":7950,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"coauthors":[161,162],"class_list":["post-4631","post","type-post","status-publish","format-standard","hentry","category-non-categorizzato"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Artificial Intelligence Can Enhance Human Labour - Rivista Eco<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/www.rivistaeco.com\/en\/2024\/10\/08\/artificial-intelligence-can-enhance-human-labour\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Artificial Intelligence Can Enhance Human Labour - Rivista Eco\" \/>\n<meta property=\"og:description\" content=\"Will AI manage to revive the sluggish economic growth seen over the past twenty years? 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