Generative AI Could Undercut Labor Income, Affecting the Entire Economy

Generative AI — the type that generates text and images — offers benefits and troubles. Time-saving to have software that can do near-creative tasks that once took people. Dangerous in its proclivity to invent facts.

Now, a new paper from economists suggests a new issue. “Unlike previous technologies, AI may undermine labor’s share of national income, and technological innovation could, for the first time, permanently reduce the importance of labor in the economy, even if full employment is maintained,” Lukasz Drozd, economic advisor and economist at the Federal Reserve Bank of Philadelphia, and Marina Tavares, economist at the International Monetary Fund, wrote.