Generative AI may create a socioeconomic tipping point through labour displacement.

Area of Science:

• Economics
• Sociology
• Artificial Intelligence

Background:

• Work is vital for societal prosperity and mental health.
• Job insecurity and unemployment are known risks for mental health.
• Generative artificial intelligence (AI) sparks debate on job displacement and well-being.

Purpose of the Study:

• To explore AI's impact on job displacement and economic stability.
• To analyze the potential for AI-driven recessionary pressures.
• To examine the conditions for maintaining job security and economic stability in an AI-dominated economy.

Main Methods:

• Developed a system dynamics model for ex ante analysis.
• Utilized Australian data as a case study.
• Examined the effect of AI-capital deepening on labor underutilization and demand.

Main Results:

• A moderate increase in AI-capital-to-labour ratio could double labor underutilization by mid-2050.
• Per capita disposable income may decrease by 26% and consumption by 21%.
• A 10.8-fold increase in new job creation is needed to prevent income reduction.

Conclusions:

• High AI-capital-to-labour ratios risk economic decline, even with high job creation.
• Economies must research AI's impact within specific contexts.
• Cross-sectoral government measures are crucial for a smooth AI transition and safeguarding national mental wealth.