The Economic Impact of AI Technology

This research paper goes over the definition of AI, and its macroeconomic and microeconomic impacts in terms of economic and productivity growth, and labor demand. AI (Artificial Intelligence) technology is widely being developed and expected to be used more broadly. Thus, many experts and papers are estimating its economic value and possible impact. Many reports state that AI technology will bring in considerable revenue. The revenue will increase due to improved productivity which will reduce costs, and advance the quality of products. First, the installment of AI technology will greatly increase both labor and firm productivity. According to a report, innovation induced by this technology is classified as a skill-biased technical change. When labor productivity increases, those who are high-skilled and highly educated can improve their jobs, but those who are not educated will be displaced. Also, AI technology can improve the productivity of firms by assisting various functions. Second, product personalization, quality of products, and utility of consumers will be improved and consumption will be facilitated. This research paper will go over both theory and empirical research to figure out if AI technology will influence economic growth. Economic growth is measured by estimating real GDP globally and comparing data from prior years. Many people worry that AI technology will replace their jobs. In this report, the possibility of AI replacing jobs done by humans and generating new occupations with a new paradigm will be discussed.