| Min. Time: 10 S Max Time: 10 S | |
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M Question 1
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| While some level of worker displacement is inevitable for those unable to align with shifting skill requirements in the age of Artificial Intelligence (AI), the scale of this displacement is shaped by the interplay between displacement effects and productivity gains. For instance, in highly demand-elastic markets, the "reinstatement effect" has historically acted as a counterbalance against the displacement effect caused by automation. Technological advancements in markets with unmet demand often give rise to auxiliary tasks where labour maintains a competitive edge. Such tasks not only enhance productivity but also reinstate labor into a broader spectrum of roles, thereby altering the task composition of production in labor's favor. The primary purpose of the passage is to: (a) Argue that the negative employment impacts of AI are likely to be far less severe than commonly predicted due to the strength of the reinstatement effect. (b) Explain that while technological progress brings worker displacement, its net effect is mediated by productivity gains and the creation of new roles. (c) Warn that unless proactive measures like retraining are implemented, the displacement effect of AI will overwhelmingly dominate potential productivity gains, leading to mass unemployment. (d) Demonstrate that highly demand-elastic markets are the only sectors where labor can maintain a competitive edge against automation in the long run. |
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