Expecting job replacement by GenAI: effects on workers' economic outlook and behavior

Summary

Focus

Our research explores how people's expectations about the impact of generative AI (gen AI) on jobs shape their broader economic outlook and behaviour. To investigate this, we conducted surveys and randomised experiments in the United States and Japan. Participants were randomly given expert estimates showing that gen AI might replace either 14% or 47% of current jobs. We measured their beliefs about job replacement due to AI both before and after they received this information. Additionally, we asked them to forecast economic indicators such as GDP growth and inflation rates, and to report their willingness to learn and use AI in the workplace.

Contribution

While many studies have examined how people feel about AI's impact on the labour market, there has been little research on how these perceptions influence economic expectations and decisions. This is important because people's beliefs – especially about technology – can influence their behaviour, investment decisions and even inflation or growth trends. By filling this gap, our study provides new insights into the broader consequences of public expectations about gen AI, particularly how they might affect inflation forecasts, labour market participation and AI adoption.

Findings

We find that people do revise their views about gen AI's impact when presented with expert information. In Japan, higher expected job replacement due to gen AI led to higher inflation expectations and increased intentions to use gen AI at work, especially among those in creative jobs. These shifts may reflect growing expectations of investment in AI technologies. In the United States, however, the impact was different: although people also updated their beliefs, this did not lead to greater gen AI adoption. Instead, those with higher education levels expected reduced demand for labour and required skill in their current jobs. This highlights key differences in how expectations influence economic behaviour across countries.

Abstract

This paper examines the relationship between individuals' expectations of job replacement by generative AI (GenAI) and their macroeconomic outlooks and behaviors. Using online surveys combined with randomized experiments conducted in the U.S. and Japan, we derive the following findings about the effects of expecting greater job replacement due to GenAI. First, in both the U.S. and Japan, respondents revise their beliefs after receiving information about GenAI's job replacement ratios. Second, in Japan, such an expectation leads to an increase in inflation expectations driven by a rise in investment. Third, it increases respondents' willingness to use GenAI in workplaces in Japan. Fourth, in the U.S., expectations of greater job replacement amplify concerns about weaker short-term labor demand and reduced skill requirements, particularly among more educated respondents. In addition, these respondents anticipate lower investment, while less educated respondents expect higher investment.

JEL classification: E24, E31, O30

Keywords: Generative Artificial intelligence, labor market, inflation, productivity