Answer to Question #313570 in Macroeconomics for martin

Question

When an employer lists a job opening, they receive hundreds of applications. Eightfold is a new product that uses artificial intelligence (AI) to scan resumes and quickly and accurately identify the applicants who are the best fit for the job. An economist who studied the use of AI in hiring said, “You get the more nontraditional, equally qualified, equally high-performing people, but the employer doesn’t seem to have to compete for them as much.” What effect might the use of AI have on the slope of the Phillips curve and why?

Answer 1

Solution.

The use of artificial intelligence could have an impact in the slope of Phillips curve by making it more steeper. AI has challenges in hiring such as biasness since bias can be added into data being used. Often companies will use data from their employees to decide what people to recruit or hire. This can perpetuate bias and lead to more homogenous workforces. t can also be hard to quantify what makes a good employee. This poses a challenge for training AI to predict which employees will be best. Economic growth could be fueled by robotic infrastructure. Because the robotic infrastructure would have possibly replaced individuals, growth would not be accompanied by employment opportunities. Since this could result in unemployment, the demand for goods and services could be expected to be put under pressure. If supply remains the same because the robotic infrastructure will be producing, potentially at a higher rate than humans, prices could be expected to decline, dampening inflation prospects.