Table 1 Parameter values used in the model analysis and data sources.
From: Generative AI may create a socioeconomic tipping point through labour displacement
Parameter | Symbol | Value | Data source |
|---|---|---|---|
Underutilised persons initial | U0 | 1,445,000 | Unemployed plus underemployed persons in Australia as of 30th June 2023—seasonally adjusted (ABS, 6202.0 Labour Force, Australia, Table 22. https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release) |
Ratio of underemployed to unemployed | r | 1.6 | Derived from ABS, 6202.0 Labour Force, Australia, Table 22. https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release. Average value over the 10-year period, Dec 2013—Nov 2023. Varied by ± 10% in sensitivity analyses |
Ratio of disposable income of an underemployed to fully employed person | – | 77% | Derived from Table 25 of: Campbell I., Parkinson, S. and Wood, G. (2014) Underemployment and housing insecurity: an empirical analysis of HILDA data, AHURI Final Report No.230. Melbourne: Australian Housing and Urban Research Institute |
Labour underutilisation onset rate initial | O0 | 9.9% | Derived from ABS, 6202.0 Labour Force, Australia, Table 22 https://www.abs.gov.au/statistics/labour/employment-and-unemployent/labour-force-australia/latest-release |
Base labour underutilisation onset rate increase per year | β | 0.0015 | Reasoned estimate based on plausible forward projections of labour underutilisation to 2050.5. Varied by ± 10% in sensitivity analyses |
Labour force initial | i | 14,585,316 | Labour force total persons as of 30th June 2023. ABS, 6202.0 Labour Force, Australia, Table 22: https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release |
Capital-to-labour ratio (K-L ratio) initial | K0 | 94.6 | ABS, Australian National Accounts, 2022–23, Cat. no. 5204.0, Table 13: https://www.abs.gov.au/statistics/economy/national-accounts/australian-system-national-accounts/latest-release. Quality adjusted hours worked and indexed (2021 = 100) |
K-L ratio percent increase per annum | α | 1.8% | ABS, Australian National Accounts, 2022–23, Cat. no. 5204.0, Table 13: https://www.abs.gov.au/statistics/economy/national-accounts/australian-system-national-accounts/latest-release. Average annual increase in the K-L ratio over the period 1995 to 2023 derived from regression model |
Initial population | P0 | 26,638,544 | The population of Australia as of 30th June 2023 (https://www.abs.gov.au/statistics/people/population) |
Population increase percent per annum | \(g\) | 1.1 | Population projections, Australia:https://www.abs.gov.au/statistics/people/population/population-projections-australia/2022-base-2071. This approximates medium series by 2050.5 |
Mortality rate | m | 0.0015 | Derived from Australian Bureau of Statistics. Table 1.9, Life Tables, Australia, 2020–2022 https://www.abs.gov.au/statistics/people/population/life-expectancy/latest-release and population data for each age |
New job creation rate per capita | λ | 0.0021 | Australian Bureau of Statistics. (2019, December 10). Jobs growth over the past 25 years. ABS. https://www.abs.gov.au/articles/jobs-growth-over-past-25-years. Varied between 0.001 (half the default value) and 0.0042 (double the default value) in sensitivity analyses |
Delay in change to underutilisation onset rate | d | 5 | 5 years—an estimate. Delay in changes to the underutilisation onset rate as a result of changes to the K-L ratio |
Base Multi-Factor Productivity (MFP) rate | ν | 0.56298 | Derived from MFP data, OECD, Australia, 1985–2022: https://data.oecd.org/lprdty/multifactor-productivity.htm |
Scaling factor | τ | 86,985 | To align the model’s output with the June 2023 Real Net National Disposable Income (RNNDI) per capita in Australia, a scaling factor of 86,985 was applied. This calibration ensures the model’s initial conditions broadly reflect a real world economic indicator of disposable income (data: Table 1 : https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release#data-downloads) |
Proportion of disposable income affected by productivity related price decreases | ω | 50% | Reasoned estimate. Varied between 30 and 70% in sensitivity analyses |
The per unit change in average disposable income as the proportion of the population underutilised changes | θ |
| Graphical converter*: Points (underutilisation, disposable income): (0.000, 1.359), (0.500, 1.152), (1.000, 1.000), (1.500, 0.876), (2.000, 0.796), (2.500, 0.748), (3.000, 0.705), (3.500, 0.676), (4.000, 0.648), (4.500, 0.631), (5.000, 0.612). Value of 1 is reference point (i.e. current values of underutilisation and average disposable income). Highlighted example says that if underutilisation was double the current rate, then average disposable income (wages) would be 79.6% the current level (or 20.4% less than the current level). Approximates Phillips Curve provided by the Reserve Bank of Australia (Fig. 3 in https://www.rba.gov.au/publications/rdp/2021/pdf/rdp2021-09.pdf) |
The per unit change in the underutilisation onset rate as a result of changes to the K-L ratio due to generative AI | η |
| Graphical converter*: Points (K-L ratio, labour underutilisation onset rate): (0.000, 0.000), (0.500, 0.291), (1.000, 1.000), (1.500, 1.990), (2.000, 3.083), (2.500, 4.029), (3.000, 4.636), (3.500, 4.976), (4.000, 5.000), (4.500, 5.000), (5.000, 5.000) |
The per unit change in the MFP rate as a result of changes to the K-L ratio due to generative AI | δ |
| Graphical converter*: Points (K-L ratio, MFP): (0.000, 0.000), (0.500, 0.415), (1.000, 1.000), (1.500, 1.524), (2.000, 2.214), (2.500, 3.135), (3.000, 4.093), (3.500, 4.667), (4.000, 4.929), (4.500, 5.000), (5.000, 5.000) |
The per unit change in prices as MFP increases | ρ |
| Graphical converter* (MFP, prices): Points (MFP, Prices): (0.000, 1.3890), (0.500, 1.1500), (1.000, 1.0000), (1.500, 0.9223), (2.000, 0.8870), (2.500, 0.8560), (3.000, 0.8332), (3.500, 0.8083), (4.000, 0.8000), (4.500, 0.8000), (5.000, 0.8000) |
