Maik T. Schneider, University of Bath: "Artificial Intelligence: Economic Challenges of Technological Uncertainty"

Abstract:

With the 4th Industrial Revolution ahead there is huge uncertainty about the likely labor market impacts ranging from massive layoffs as a response to Automation and AI to the view that overall more jobs will be created than lost. Whatever the outcome in the end, there will be major structural change with substantial implications for individual labor income risk. We argue that technological uncertainty can make large parts of society worse off even though technological progress has a positive effect on average incomes and that precautionary savings are ineffective in protecting against labor market risk from major technological shifts. We examine whether policies such as a Universal Basic Income scheme or a “Robot Tax” can reduce the technological uncertainty and make people benefit from technological change. We also discuss whether a “Technological Insurance” scheme is feasible and when it is favourable from a welfare perspective.