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.

Question

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.

ONLiNE UPSC · Accepted Answer

Statement (a) is not correct: The passage acknowledges "displacement is inevitable" for some and discusses factors shaping its "scale." It does not make a strong claim that impacts will be "far less severe" overall, but rather explains a counterbalancing mechanism.

Statement (b) is correct: This statement encompasses the dual impact: "inevitable" displacement for some, but also the "counterbalance" from the "reinstatement effect" (new roles, productivity gains leading to demand) in "highly demand-elastic markets," meaning the net effect isn't simply one-sided displacement.

Statement (c) is not correct: The passage's main purpose here is to explain the interplay of displacement and reinstatement effects as an economic dynamic, not primarily to issue a warning contingent on retraining.

Statement (d) is not correct: The passage highlights demand-elastic markets as where the reinstatement effect has "historically acted as a counterbalance." It doesn't claim these are the only sectors or that this edge is guaranteed indefinitely without further context.

Min. Time: 10 S Max Time: 10 S
M Question 1	⏱ 0
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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