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 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. We argue that
precautionary savings are an ineffective protection against labour market risk
arising from major technological shifts and discuss four policy instruments, 1)
a private insurance scheme, 2) a universal basic income, 3) a robot tax, and 4)
a governmental insurance scheme. Further, we examine whether these policy
instruments are suitable to achieve high and inclusive growth