National Productivity Week 27th January 2025 | Visit Website

A diverse community of leading experts, policymakers and practitioners

The Institute’s key research themes are led by ten academic partners spread across the UK.

Working closely with policymakers

We’re a UK-wide research organisation exploring what productivity means for business

Businesses are crucial to solving the UK’s productivity problems.

AI and productivity: Productivity Puzzles blog

The profound impact of artificial intelligence (AI) on productivity and the labour market is tackled by host Bart van Ark and experts Erik Brynjolfsson, Tera Allas, and Lea Samek in the latest episode of the Productivity Puzzles podcast. Artificial Intelligence and Productivity dives deep into various facets of AI, including generative AI, its potential applications, estimations of productivity gains, adoption drivers and barriers, labour market effects, and the UK’s strategic response.

The Rise of generative AI: a game changer for productivity?

Generative AI, characterised by expansive artificial neural networks inspired by the human brain, is at the forefront of AI development, with tools like ChatGPT. The podcast panellists delve into the significance of this form of AI and its potential to revolutionise productivity. Through a range of applications, generative AI can unlock unprecedented levels of efficiency and innovation, enabling researchers to push the boundaries of knowledge and discover valuable combinations of ideas. Its cognitive impact distinguishes it from previous waves of automation, making it a powerful force in transforming the workforce.

Estimating the productivity effects of AI

Pinpointing the exact impact of AI on productivity proves challenging, but not insurmountable. In the podcast, the guests discuss various studies and projections, highlighting the potential gains in productivity over the coming years. Estimates from prominent organisations such as Goldman Sachs, McKinsey, OECD and Brookings Institution shed light on the range of potential effects and the interplay of adoption speed and worker replacement. By understanding the channels through which AI influences productivity, including output production efficiency and accelerated innovation, we gain insights into the macro-level implications of AI implementation.

Drivers and barriers for adoption

The pace of AI adoption across industries and organisations significantly influences its transformative potential. The podcast sees the panellists explore the drivers and barriers that shape the adoption landscape. Factors such as the time to implement solutions, costs of technology adoption, concerns over job losses, institutional inertia, and regulatory concerns play pivotal roles. However, mitigating these barriers and fostering accelerated adoption are achievable through software integration, advanced search engines, and interaction with AI through natural language. Additionally, the presence of complementary assets, digital infrastructure, and ICT skills enhances the productivity advantages of AI users.

Labour market effects and evolving skill requirements

While AI holds immense promise for productivity gains, it also raises questions about its impact on jobs and the nature of work. This section of the discussion revolves around the characteristics and importance of workers skilled in statistics, computer science, and machine learning, who actively develop and maintain AI systems. The panellists examine the distinction between job displacement and reinstatement, highlighting that technology-induced job losses can be offset by alternative employment opportunities. The evolving task landscape prompts a reconsideration of workers’ potential comparative advantages over AI in the future. This can be considered through a division of tasks into mechanical (repetitive, standardised), thinking (judgement, creativity, and intuition skills), and empathetic (interpersonal relationships, empathy). Is it the case that humans will only have an advantage in empathetic tasks?

AI Strategy and the UK’s Response

The episode concludes with a focus on the UK’s positioning and response to AI’s potential. The panellists examine the exposure of the UK to AI and its readiness to leverage productivity benefits. They debate the necessity of a robust government strategy, considering the industry’s size, workforce skill readiness, and the need for comprehensive regulation. Insights from the United States, China, and the OECD Principles on Artificial Intelligence provide valuable reference points for formulating an effective and inclusive AI strategy.

As AI continues to reshape our world, understanding its implications and harnessing its transformative power becomes essential for individuals, organisations, and policymakers alike. This podcast episode is by no means a comprehensive overview of the effects of AI on productivity, but aims to pave the way for further exploration and discussions on the future of AI and its role in driving productivity and beyond.