A Nobel Prize-winning economist warns that artificial intelligence (AI) will not return Western economies to an era of rapid productivity growth, an era that may be gone for good.
Christopher Pissarides, who has long studied the impact of automation on employment, stated that up to 40% of jobs in the United States and United Kingdom are largely immune to the effects of AI. He cited examples including sectors like caregiving and hospitality.
The significant slowdown in growth across developed economies over recent decades has led tech companies and governments to pin hopes on AI to revitalize economic expansion. The weak performance of Western economies, particularly in Europe, not only complicates policymaking but could also heighten political tensions against a backdrop of stagnant real wage growth.
However, Pissarides noted there is currently little evidence that AI is delivering a clear boost to productivity. He also cast doubt on the views of figures like Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman, who have claimed AI will have a profound impact on the job market. Pissarides won the Nobel Prize in Economics in 2010 for his work on labor market friction theory.
Pissarides said that while the technology may yield some productivity benefits, "I doubt whether we will see a new boom cycle that can be compared to the computer revolution of the 1980s and 1990s."
Speaking earlier on Monday at the Royal Economic Society's annual conference in Newcastle, Pissarides pointed out that for the high growth rates predicted by optimists to materialize, there would need to be a massive productivity leap in sectors most affected by AI, such as finance.
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