Could AI diffusion affect global patterns of migration?
It would depend on whether AI tools impact skill premiums differently in rich countries vis-a-vis others
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People migrate across oceans to improve their lives. The main pull factor is better education and employment opportunities abroad. How would the fast-paced diffusion of artificial intelligence (AI) tools alter patterns of international migration?
People migrate across oceans to improve their lives. The main pull factor is better education and employment opportunities abroad. How would the fast-paced diffusion of artificial intelligence (AI) tools alter patterns of international migration?
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Such movement, except when forced by civil wars and the like, is a win-win for both sides. In recent decades, developed countries such as the US, Canada, Japan and Germany have faced a shortage of workers, given their ageing populations and low birth rates. Immigrants have filled this void at both ends of the spectrum, helping high-productivity sectors flourish and keeping wages under control in low-productivity service sectors.
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Indian immigrants in the US are a typical example of high-skilled settlers, while Mexican migrants with lower education and skills tend to work in low-productivity sectors. The latter are still better off in America than they would be back home. Overall, foreign-born US residents who are not citizens by birth accounted for around 17% of the civilian labour force in 2019, up from about 7% in 1980. This does not account for the children of earlier immigrants, a second generation of people who are US citizens by birth.
Many immigrants initially go to the US for quality higher education. The advent of AI, however, will bring personalized quality education within people’s reach right at home. In theory, they would no longer need to go abroad for education, except for those in core theoretical scientific research. Yet, making the most of AI for learning requires the aptitude, aspiration and motivation to excel. Those who migrate for education purposes primarily belong to this category.
But do students and the market at large value higher education for its skilling or signalling functions? This has been an ongoing debate and the opinions of economists vary widely. Suppose a well-known university primarily signals the quality of its students. In that case, AI tools will not be able to replace the approval stamp of highly-ranked educational institutions until the development of a credible and widely accepted certification system for tool-based learning.
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How would AI influence demand for migrant workers? It could lead to job displacement in industries like information technology. For example, the need for a human coder for basic coding would decline as AI develops the expertise to convert text into codes, fix bugs and suggest improvements and extensions to existing codes. The same goes for routine maintenance and bug-fixing tasks. In contrast, in industries such as healthcare, AI is likely to lead to less job displacement. Patients would still want to talk to a human rather than a robot. It’s difficult to imagine a warm hug from a robot nurse. Demand for IT engineers is likely to fall with the spread of AI and related tools, but unlikely for nurses and doctors, unlike what was earlier perceived.
While robots can perform routine surgeries, patients would still want a qualified surgeon present in the operation theatre. Doctors will become more efficient and increasingly use AI for health diagnosis and treatment decisions and patients will still want human doctors to convey it to them. With ageing populations, demand for healthcare services will likely remain strong in developed countries and increase in others.
Similarly, it may take some time before humans accept robots to cut their hair, babysit their kids or cook for them. Drones are unlikely to replace a delivery person soon in densely populated urban residential areas. A robot waiter is unlikely to replace a human server in most restaurants simply because humans would like to talk to other humans when they are not working with their machines. While autonomous vehicles have made progress, they are unlikely to replace truck and bus drivers soon. Demand for such skilled service occupations that do not require high formal education will probably remain robust, at least for now.
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AI development could also lead to increased economic growth and job creation in some industries. A new skill category is already emerging of the prompt specialist, who excels in using the universe of AI tools in an integrated and effective manner. A prompt is a text that a human writes to instruct an AI tool. Specialists could work remotely from anywhere in the world, potentially reducing the need for migration. The wage premium for remote work, however, would decline.
Overall, falling AI costs and rising use may lower the average skill premium for highly educated humans, barring the few who can deploy AI tools effectively, spot their errors and contextualize their output (within, say, a culture) to extract most value. If so, would the highly educated of India continue to go West in large numbers? The answer would depend on their opportunity cost: if the skill premium narrows within all economies, rich countries will continue to attract economic migrants. Young migrants would continue to gain and raise their productivity in the West, where wages would still be higher. At the upper end, young people may begin to go for dual specializations, combining sciences and humanities to distinguish their skill sets.
Given that we are still in the nascent stages of AI adoption, it isn’t easy to comprehend its impact on international migration patterns for education and employment. However, the rapid expansion of AI-related technology could lower the demand for some high-skill occupations in sectors like IT and thereby cap earnings, even as it creates various new jobs. Medium and low-skill occupations in services that require face-to-face interactions seem better insulated from AI for now.
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Vidya Mahambare is a professor of economics at Great Lakes Institute of Management, Chennai.
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