Economists are constantly churning out fascinating research, and as much as we try at Planet Money, there's a lot of stuff we don't cover. So, periodically, we like to do a little round-up of interesting economic papers we've come across and share it with you in the Planet Money newsletter. (If you're not already subscribed, you can subscribe here).
Welcome to the latest Planet Money Econ Paper Roundup!
Creating a world with "Pro-Worker Artificial Intelligence"
Recently, Jack Dorsey, the co-founder and CEO of Block (and co-founder and former CEO of Twitter), announced that he was laying off 4,000 workers — or about 40% of Block's workforce. And he suggested a big reason for the layoffs was AI had made many of the workers redundant. Block's stock price surged on the news.
For what it's worth, analysts are skeptical that AI is the real reason Block is laying off so many workers. They suggest Block is downsizing because its executives made the mistake of overhiring in recent years. Meanwhile, their stock price is down more than 80% since its 2021 peak. They suggest that invoking AI as the reason for layoffs was basically PR spin.
Nonetheless, Dorsey's announcement of AI-related layoffs took econ social media by storm.
Probably because, as public surveys suggest, the majority of American workers are suffering from what you might call AI anxiety. Can you blame them? The technology has made dramatic advances in recent years, and tech leaders, like Jack Dorsey, blame — or maybe scapegoat — AI for job losses. Meanwhile, AI executives are making mind-blowing predictions about how AI is going to kill all sorts of jobs in the near future.
In a new essay, a group of rockstar economists from MIT offers a more hopeful vision for the future of human work. One in which humans collaborate with AI to get better at existing jobs, AI creates new jobs, and human workers thrive in the age of AI. It's a vision they call "pro-worker artificial intelligence," and, while achieving it seems possible, they also argue that big policy changes need to be made in order to make it real.
The economists behind this essay are David Autor, one of the top labor economists in the world, and Daron Acemoglu and Simon Johnson, who shared the 2024 Nobel Prize in economics (Check out our Planet Money episode about why Acemoglu and Johnson, together with James Robinson, won the prize).
Acemoglu, Autor, and Johnson spend much of the essay providing a thought-provoking analysis of how new technologies can affect human jobs in general. In short, it's complicated. Yes, often they do kill jobs. Other times they can make jobs less lucrative by, for example, making those jobs easier to do — or "de-skilling" them — which means the supply of workers who can do these jobs goes up and wages for the occupation can go down. Think like what GPS and interactive smartphone maps did to skilled taxi drivers. Their intimate knowledge of their cities was no longer as valuable — and their wages seem to have gone down — as the smartphone enabled a flood of less skilled drivers to hit the market using apps like Uber and Lyft.
However, the economists write, new technologies have also allowed plenty of workers to get better at their jobs while helping to enrich them. One example (not cited in the essay) is how online legal research databases like WestLaw, word processors, and email enabled lawyers to do their core, most profitable intellectual tasks better and faster.
Moreover, new technologies can also create new tasks or entirely new jobs for humans to do. Think like robot technicians, or podcasters. In fact, a 2024 study from Autor and a group of other economists found that around 60% of workers in 2018 were working in occupations that didn't even exist in 1940.
The economists hope that, like some past technologies, AI could be leveraged in ways to improve human performance in existing jobs while also creating all sorts of new jobs for people to do. "While AI's capacity to automate work and displace workers is beyond doubt, we simultaneously believe that, used well, AI has equally momentous potential to act as a force-multiplier for human skills and expertise," the economists write. The economists envision a future where human workers are basically cyborgs, working in collaboration with AI.
However, they fear there are at least two big things standing in the way of their vision of an economy where AI is deployed in ways that benefit workers.
First, misaligned incentives. "Leading firms perceive greater economic returns to building and deploying technologies that automate expertise than those that create new tasks for workers and increase the value of skills and expertise," the economists write.
Second, pro-automation ideology. They paint the tech industry as hyperfocused on creating Artificial General Intelligence (AGI), the hypothetical next stage of AI in which machines exceed all human capabilities and can do most, if not all, jobs without any human collaboration. The economists are skeptical that this will be achieved, at least in the near future. And, they warn that "if firms are single-mindedly pursuing AGI-driven automation, this makes it less likely that they will build pro-worker AI."
"While AI's capacity to automate work is substantial, we argue that its potential to serve as a collaborator, by extending human judgment, enabling new tasks, and accelerating skill acquisition, is equally transformative and currently underexploited," the economists write.
The economists offer a variety of policy ideas that they believe could help overcome the hurdles to creating an economy in which AI is designed and deployed for the benefit of workers. One is changing the tax code. Currently, the government taxes machines, software, and equipment (aka capital) at a lower rate than labor, which creates an extra incentive for firms to use AI systems to fully automate away human jobs.
Another idea the economists offer is, basically, leveraging the government's existing heavy involvement in and financing of health care and education to guide those massive industries into adopting AI technologies that keep workers in the driver's seat of work while also making those workers much more productive at their jobs.
Other ideas include using government grants to incentivize companies to adopt pro-worker AI; passing intellectual property laws that prevent human expertise from being stolen and mimicked by machines; and liberalizing occupational licensure laws, which make it hard for non-credentialed workers to do certain tasks. For example, nurses, with the help of AI, may be able to do more tasks and procedures currently reserved for doctors. But existing licensure laws prevent nurses from doing them.
A few years ago, when Generative AI was relatively new, we spoke with David Autor on Planet Money podcast and the Planet Money newsletter on how AI could be leveraged to try and rebuild the middle class. This new essay is an elaboration on some of the themes we discussed back then.
And there's a full chapter on AI, automation and the case of the ATM and the bank teller in our book coming out in April, Planet Money: A Guide To The Economic Forces That Shape Your Life. It's a great story about a past wave of automation that holds some lessons for right now. If you pre-order it, you can get a free poster. Check those out.
Album release days seem to result in more traffic deaths
Driving accidents are one of the leading killers in the United States. They killed almost 40,000 people last year, according to a preliminary analysis from the National Safety Council.
It's pretty obvious smartphone-related distractions are one important contributor to this problem. With smartphones and car infotainment systems, there are a lot of different ways for drivers to become distracted and accidentally kill themselves or someone else.
But we lack solid data because researchers can't ethically do randomized controlled trials that result in injuries or deaths, and it's not always obvious what caused fatal accidents after the fact.
The economists Vishal R. Patel, Christopher M. Worsham, Michael Liu, and Anupam B. Jena had a sort of brilliant idea to research this area. What if they looked at something kinda random that could cause more drivers to be using their smartphones on certain days, and then see what that does to the traffic fatality rate?
And so they decided to look at what happened on the release dates of the ten most streamed albums between 2017 and 2022. Those include three Taylor Swift albums, Midnights, Red (Taylor's Version), and Folklore; three Drake albums, Certified Lover Boy, Scorpion, and Her Loss; Bad Bunny's Un Verano Sin Ti; and Kendrick Lamar's Mr. Morale & The Big Steppers.
This working paper is titled, "Smartphones, Online Music Streaming, and Traffic Fatalities," and the economists crunch government data on traffic fatalities and streaming data from Spotify. They look at what happens on the days these popular albums were released, and compare those days to the 10-day window before and after their release dates to control for seasonal and other factors that may also affect fatality rates on those days.
The economists estimate that music streaming — a key indicator of smartphone use and thus potentially distraction — increases by nearly 40% on the dates of these popular album releases. That suggests a lot more smartphone use — and a lot more distraction. Sure enough, the economists find that U.S. traffic fatalities increased by nearly 15% on those same days. Yikes!
Minimum wage hikes may increase automation
In another new working paper, "Minimum Wages and Rise of the Robots," the economists Erik Brynjolfsson, J. Frank Li, Javier Miranda, Robert Seamans & Andrew J. Wang looks at how increases in the minimum wage affects companies' adoption of robots.
The economists look specifically at the American manufacturing industry between 1992 and 2021. And they find evidence that, indeed, hikes in the minimum wage increase the likelihood that manufacturing firms adopt robots. And the effect they find appears pretty sizable: "a 10 percent increase in the minimum wage increases robot adoption by roughly 8 percent relative to the mean."
This isn't the first study to find evidence that hikes in the minimum wage may result in greater automation. Studies by, for example, Lordan and Neumark (2018); Harasztosi and Lindner (2019); Akgunduz (2024); and Plümpe (2024) find something similar, both in the U.S. and abroad.
More immigration may result in fewer deaths of old people
Immigration is obviously a contentious political subject these days, and with so much focus on the costs, many seem to have lost sight of its benefits.
A new working paper shines a spotlight on one of those benefits: improving American health.
The paper's title says a lot about what it's about: "Is Immigration Good for Health? The Effect of Immigration on Older Adult Mortality in the United States."
The authors David C. Grabowski, Jonathan Gruber, and Brian E. McGarry look at how immigration affects the U.S. health care sector, specifically the care of elderly Americans.
They highlight there are "shortages of doctors and nurses" in many communities around the United States, and that immigrants have become an important part of filling vacancies in the health care workforce.
"Roughly 1 in 5 frontline nursing home workers are immigrants, nearly 1 in 3 home care workers are immigrants, and 18% of all health care workers are immigrants," the economists write, citing various previous studies.
Senior citizens are the heaviest users of health care, so they're particularly sensitive to the scarcity of health care workers.
Grabowski, Gruber, and McGarry first estimate that "admitting 1,000 new immigrants would lead to 142 new foreign healthcare workers, without evidence of crowd out of native health care workers."
And, they estimate, that has a sizable effect on the death rate of senior citizens. "We find a striking and statistically meaningful decline in elderly mortality associated with more immigration: 1,000 additional immigrants result in 9.8 fewer deaths among the elderly annually in the average Metropolitan Statistical Area (MSA)," they write.
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