BFI and CAAI Public Event: Technology, AI, and the Labor Market

Why It Matters

Understanding AI’s role in labor markets is crucial for businesses and policymakers to mitigate displacement risks and harness productivity gains, ensuring a smoother transition for workers in a rapidly evolving economy.

Key Takeaways

• Historical tech shifts repeatedly displaced workers but spurred long‑term growth.
• AI’s impact hinges on whether it complements or substitutes labor.
• Speed of AI adoption determines how easily workers can reallocate.
• Manufacturing automation and trade reduced US jobs, raising idle prime‑age men.
• Policy must address skill mismatches and transition frictions for displaced workers.

Summary

The Becker Friedman Institute and Booth’s Center for Applied Artificial Intelligence hosted a joint event to explore how artificial intelligence intersects with labor markets. Faculty members Eric Hurst and Sanjark Misra framed AI’s influence against a backdrop of centuries‑long technological disruption, emphasizing that today’s debate echoes concerns voiced by economists from Keynes to Simon.

Hurst outlined a four‑part framework for assessing any new technology: whether it complements or substitutes labor, the availability of alternative occupations for displaced workers, the barriers to reallocation, and the speed of adoption. He argued that AI’s net effect will depend on where it falls within these bins, noting that rapid diffusion can outpace natural labor adjustments.

Historical anecdotes punctuated the talk—from Queen Elizabeth’s 1589 patent refusal to JFK’s warning about automation’s impact on wages—illustrating that fear of “technological unemployment” is perennial. Recent data showed a steady decline in prime‑age men’s employment rates, a rise in long‑term inactivity, and a 6‑million‑job drop in U.S. manufacturing, driven by both trade competition and automation.

The discussion concluded that policymakers, educators, and firms must proactively manage skill mismatches and transition frictions. Without targeted reskilling and labor‑market interventions, AI’s accelerated rollout could exacerbate displacement, while thoughtful alignment could sustain the historical pattern of technology‑driven productivity gains.

Original Description

As advancements in automation and artificial intelligence continue to reshape industries, what will the impact be on workers? Will these innovations lead to widespread job losses, or will the labor market adapt, as it has in the past?

Erik Hurst, Roman Family Distinguished Service Professor of Economics, Senior Advisor of the Becker Friedman Institute, and John E. Jeuck Faculty Fellow, shared remarks on how recent developments in AI and automation are influencing the labor market, drawing parallels from earlier technological transitions. Sanjog Misra, Charles H. Kellstadt Distinguished Service Professor of Marketing and Applied AI, joined for a conversation on AI and the labor market, followed by audience Q&A.

This event was co-hosted by the Becker Friedman Institute for Economics and the Center for Applied Artificial Intelligence at Chicago Booth.

View Event Page: https://bfi.uchicago.edu/events/event/bfi-public-event-technology-ai-and-the-labor-market/