AI May Have to Replace Workers Who Were Never Born

Summary

This data-driven essay asks whether artificial intelligence can compensate for the economic effects of falling fertility and rapidly aging populations. South Korea is the clearest case: its fertility rate fell from 6.0 in 1960 to 0.72 in 2023, while the number of people aged 20 to 64 per person over 65 is projected to fall from 3.2 today to 1.25 by 2050. Using UN population projections and World Bank productivity data, the authors estimate that demographic change will reduce annual growth in income per person by 1.12 percentage points in South Korea, 0.90 in Spain, 0.76 in Italy, 0.66 in China and 0.55 in Japan between 2025 and 2050. Later retirement could sharply reduce the drag in some countries, while immigration is left outside the analysis. Historical research suggests that labor scarcity can encourage automation, and a recent cross-country paper links lower birth rates with faster growth in output per working-age adult and more labor-saving patents. Whether AI can provide a comparable response remains uncertain. Published forecasts range from modest productivity effects to roughly 1.5 percentage points a year in a highly adopted US scenario; only the upper end of two forecasts would offset South Korea’s demographic drag. Early labor-market evidence is mixed: Stanford payroll data show employment for 22- to 25-year-olds in AI-exposed occupations falling 6% through September 2025 while employment for 35- to 49-year-olds rose more than 8%, but other studies find effects close to zero or smaller than in less-exposed occupations. The essay notes that junior workers are concentrated in tasks such as drafting, summarizing, routine analysis and coding, and that delayed employment may affect family formation, but it does not claim AI caused the fertility decline. Its accounting exercise assumes constant employment rates, while AI forecasts are mostly US-based and the employment evidence is correlational. The central uncertainty is whether AI makes young workers productive sooner or simply substitutes for them.