The Human Capital — Artificial Intelligence Symbiosis and Economic Growth

Abstract

This paper contributes to the recent literature on the economic growth implications of automation and artificial intelligence (AI), by devising and exploring the dynamics of an analytical model featuring the gradual substitution of labor by automated processes. In the proposed setting, a symbiotic relation between the expansion of AI and the accumulation of human capital stands out as the driver of long-term sustained growth. Two versions of the model are scrutinized. In the first version, the representative capitalist is an optimal planner, while workers (who are heterogeneous regarding their productivity levels) are hand-to-mouth consumers. In the second version, every agent formulates an intertemporal plan and may, simultaneously, be a worker and an investor. This difference in context is vital for identifying the potential beneficiaries of the implementation of labor-saving technologies.