Over the past few years, I have generally been pretty relaxed about the proposed threat to jobs from technologies such as AI and robotics. Indeed, most of the evidence to date suggests that when firms invest in these technologies, their headcount tends to rise.
Nonetheless, history does suggest that any widespread adoption of technologies that do displace people produces a period in which some will lose out before new jobs emerge in the place of those that have been lost. That’s the view of a recent study from the University of Sussex.
Slow gains
The authors argue that the productivity gains from previous industrial revolutions typically took around 40 years to be realized. Despite this, however, they’re not in the skeptical camp with regards to AI, as they believe that rather than a widespread displacement of jobs, we’re more likely to see a changing composition of employment.
“It typically takes time before a general-purpose technology (GPT) has a substantial impact on productivity,” the researchers explain. “The technology improves, complementary investments and innovations are made, businesses are re-organised and learning accrues.”
If AI forms the basis for the so-called Fourth Industrial Revolution, it’s the kind of general-purpose technology that may see a similar lag between adoption and widespread productivity improvements.
“It is highly likely that AI will eventually become to be seen as a classic GPT and eventually deliver the much-needed boost to productivity that techno-optimists envisage once its full potential is realised,” the authors continue. “Growth accounting estimates for earlier GPTs show that their impact on productivity takes time to develop.”
Misunderstood
The authors argue that the impact of the First Industrial Revolution, and the lessons it might have for our current time, is often misunderstood. For instance, they suggest that the impact of steam power was only really felt towards the end of the initial industrial revolution, with the intervening period characterized by poor wage growth that reflected the lackluster productivity gains the new technology initially yielded.
Eventually, new occupations emerged to replace those that were stagnating, not least as the new technologies powered a prolonged period of urbanization and industrialization. The paper highlights, however, how these changes took around 40 years to emerge.
“It is quite reasonable to think that we are at the point with AI as a general-purpose technology early in its lifetime with its significant impact on macroeconomic productivity performance lying in a not-too-distant future,” the authors say. “We would expect its impact to come into fruition sooner than the relatively lengthy time that it took for steam and electricity to make a noticeable difference though potentially not as instantaneously impactful as some of AI’s critics fear.”
