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AI and the Future of the Labor Market: The Advent of a New Paradigm?

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Part of the Evolutionary Economics and Social Complexity Science book series (EESCS,volume 28)


Information and communication technology (ICT) is changing society as we know it, and artificial intelligence (AI) will replace almost half of the current jobs in the near future. The ICT-based economy has several novel aspects that the industrial economy did not possess: network externalities, monopolies of platforms, provision of zero price services, and ambiguous roles between consumers and producers; ICT’s matching ability will cultivate markets in a deeper and more thorough manner than before. While the demand for high-skill labor related to technological progress increases, the skills gap remains wide. How will individuals who are under permanent threat of unemployment or are excluded from the market by AI respond to this situation? In this chapter, I propose a simple thought experiment to consider the impact of AI on the labor market. In this experiment, I examine the following aspects: the social implementation of AI, responses of workers to survive, social cost of unemployment, possibility of disruption, and the advent of a new society accompanied by changes in values. These analyses will help determine how institutional design and economic policy can be harnessed to address the social dilemma arising from technological innovations that raise labor productivity.


  • Knowledge-based economy
  • Artificial intelligence (AI)
  • Technological unemployment
  • Skill gap
  • Network externality
  • Winner-takes-all
  • Prosumers
  • Thorough marketization
  • Semi-market economy
  • Gig economy
  • Reputation
  • Intuition

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  • DOI: 10.1007/978-981-19-0937-5_5
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  1. 1.

    Strange (1986) named the international financial market, which had become so violent that the state institutions lost control of capital, as casino capitalism.

  2. 2.

    World Economic Forum (2020) reports a prospect of job creation and replacement by machines in 5 years. It predicts that by 2025, the proportion of humans in labor will decrease from 67% in 2020 to 53%, and 85 million jobs may be replaced by a shift in the division of labor between humans and machines or algorithms, while 97 million new jobs, such as data analysts, big data specialists, digital marketing and strategy specialists, digital transformation specialists, and so on, are expected to emerge. Nevertheless, the increasing ratio of the latter will slow down, and the skill gaps will continue to be wide. Employers will retrain 50% of their employees replaced by AI to relocate them in the companies, even though it is not certain that the investment will pay off. This seems to be typical of employees who are able to remain employed in the short term. Government retraining supports those who are unemployed in 26 advanced and emerging countries.

  3. 3.

    It should be noted that market and social conditions are influenced by policies, social institutions, and AI program concepts, so there is also more diversity than discussed here.

  4. 4.

    Ishiguro (2021) and Hirano (2021) referred to AI robots in their recent works. The main character in Hirano’s Real Intention works as a real avatar. Real avatars are a new type of occupation where a human agency visits places with AR headsets to deal with the requirements on behalf of the wealthy who cannot or do not want to execute the job by themselves due to aging, living abroad, or other reasons. The labor cost is so low that workers are used to support AI, not be replaced by AI. The cases discussed here are vividly portrayed and described by these novelists.

  5. 5.

    The original edition of this chapter was published in Japanese as (Furukawa 2020).


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Correspondence to Junko Furukawa .

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Furukawa, J. (2022). AI and the Future of the Labor Market: The Advent of a New Paradigm?. In: Aruka, Y. (eds) Digital Designs for Money, Markets, and Social Dilemmas. Evolutionary Economics and Social Complexity Science, vol 28. Springer, Singapore.

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