Economic Growth Under Transformative AI

Recent advances in AI may herald the near arrival of systems that can automate essentially all work. We review the macroeconomic implications of this scenario, in a framework synthesizing several strands of the relevant literature. Robustly, fully automating production alone (so that machines can self-replicate) would dramatically raise the growth rate and lower the labor share, breaking the Kaldor Facts that have long characterized frontier growth.

Automating R&D (so that machines can self-improve) would accelerate the transformation, but may not produce it in isolation. Wages— multiplying exploding output and a plummeting labor share—may rise or fall, depending on the returns to scale, the importance of natural resources, and the direction of technical change.