"In detailing what he termed a "scenario of rapid growth," Barr described a future where AI agents replace a wide range of professional and service occupations, while robotics automate manufacturing and transportation. In this version of the economy, labor demand would concentrate in a few highly skilled trades or roles requiring human interaction, while capital holders and "AI superstars" capture the lion's share of economic growth."
"Speaking before the New York Association for Business Economics on Feb. 17, Barr discussed the profound uncertainty surrounding how generative AI will reshape the labor market. While current data suggests a gradual integration of the technology, Barr urged policymakers not to underestimate the risks. "We should be clear-eyed about how painful these changes could be for affected workers and how challenging it would be for the government and the private sector to successfully manage the fallout.""
Generative AI and robotics could fundamentally reshape the labor market with deep uncertainty about timing and severity. A rapid-growth scenario projects AI agents replacing many professional and service roles while robotics automate manufacturing and transportation. Labor demand would concentrate in a narrow set of highly skilled trades and interpersonal roles, while capital holders and AI superstars capture most gains. Short-run layoffs and rising unemployment would likely lead to long-term declines in labor force participation as many become unemployable. Managing such a transition would require rethinking workforce development and strengthening the social safety net to avoid concentrated gains.
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