June 8, 2016

Artificial Intelligence and Employment

The substitution of human labour by artificial intelligence and robots is a keenly debated topic. Some claim that a substantial share of jobs is at risk, while others argue that computers and robots will lead to product innovations and hence to unimaginable new occupations. This column uses a survey of Japanese firms to examine the impact of AI-related technologies on business and employment. Overall, firms expect a positive impact on business but a negative impact on employment. Firms with a highly skilled workforce, however, have a more optimistic view than firms with lower skilled employees.

Since the second half of the 1990s, productivity growth has accelerated in the US due to the Information Technology (IT) Revolution. However, the productivity effects of traditional types of IT were exhausted by mid-2000 (e.g. Fernald 2015). Today, the impacts of artificial intelligence (AI) and robotics―referred to as the Fourth Industrial Revolution―on the future economy and society is attracting attention, and many speculative arguments have arisen regarding the possible effects of the Fourth Industrial Revolution. In particular, the substitution of human labour by AI and robots is being hotly discussed.

The Japanese government has begun efforts to develop and diffuse AI and robotics technologies. The Robot Revolution Initiative Council was established in 2014 and has published a report, New Robot Strategy, which includes a five-year action plan to realise the robot revolution. The Artificial Intelligence Research Center was established in the National Institute of Advanced Industrial Science and Technology (AIST) in 2015 to promote development of AI-related innovations. The Japan Revitalization Strategy 2016, which is the core growth strategy of Abenomics, places the Fourth Industrial Revolution at the top of the growth policy agenda.

The Impact of AI and Robotics on Employment

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