Stanford University


Simulating the Global Effect of Transformative AI: Growth, Welfare, Economic Power, and Policy Responses

March 2024

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Transformative AI will revolutionize production technologies in virtually all industries, expanding the range of tasks that can be automated. Consequently, it has the potential to dramatically decrease the share of GDP paid to labor, and increase the returns to capital.

What if we succeed in increasing the rate of automation by 10 times or more? How much would quality of life improve for people alive today? What are the implications for wealth creation and inequality within and across countries, skill groups, and generations? And how can economic policy ameliorate downsides and boost the benefits of transformative AI?

In this white paper, we utilize a large-scale, global macrosimulation model we developed to explore these questions quantitatively. The model features seventeen regions, containing over 150 countries comprising 99 percent of global population and 98 percent of GDP. Simulated agents comprise three skill groups — high, middle, and low — that are more or less abundant depending on the region. Each agent’s lifecycle is calibrated to comprehensive micro data, featuring labor force entry, childrearing, retirement, idiosyncratic mortality, and region-specific, realistic tax and transfer policies. We investigate, using this model, the consequences of alternate technological growth scenarios.

Stanford University