Public Policy Responses to AI

With the 4th Industrial Revolution ahead there is huge uncertainty about the likely labour market impacts ranging from massive layoffs as a response to Automation and Artificial Intelligence (AI) to the view that overall more jobs will be created than lost. Whatever the outcome in the end, there will be major structural change with substantial implications for individual labour income risk. Schneider and his colleague argue that precautionary savings are an ineffective protection against labour market risk arising from major technological shifts and discuss four policy instruments, first, a private insurance scheme; second, a universal basic income; third, a robot tax; and fourth, a governmental insurance scheme. Further, they examine whether these policy instruments are suitable to achieve high and inclusive growth.