Artificial Intelligence or Intelligence Augmentation? Unravelling the Debate through an Industry-Level Analysis

39 Pages Posted: 18 Jan 2019 Last revised: 2 Apr 2019

See all articles by Dawei (David) Zhang

Dawei (David) Zhang

Lehigh University

Gang Peng

California State University Fullerton, Mihaylo College of Business & Economics

Yuliang Oliver Yao

Lehigh University

Date Written: January 15, 2019

Abstract

The tenet of artificial intelligence (AI) is to use machines to replace humans in performing tasks while the conviction of intelligence augmentation (IA) is to use machines to assist and enhance humans in performing tasks. This study examines whether information technology (IT) substitutes for or complements human labor in the production process. It argues that the relationship between IT and human labor is more nuanced than what has been conceptualized in literature — IT not only can substitute for human labor (the AI effect) but also can complement it (the IA effect); the exact nature depends on the tasks to be performed and the education levels of the employees. We test these predictions using an industry-level dataset covering 60 US industries from 1998 to 2013. Elasticity of substitution and organizational complementarity theory are adopted to examine the substitution/complementarity relationship between IT and labor with different levels of education. The findings reveal co-existence of the AI and the IA effects during the sample period, and that education plays a critical role for workers to benefit from the massive adoption of IT by the US industries.

Keywords: information technology, human labor, artificial intelligence, intelligence augmentation, substitution, complementarity, elasticity of substitution

Suggested Citation

Zhang, Dawei (David) and Peng, Gang and Yao, Yuliang, Artificial Intelligence or Intelligence Augmentation? Unravelling the Debate through an Industry-Level Analysis (January 15, 2019). Available at SSRN: https://ssrn.com/abstract=3315946 or http://dx.doi.org/10.2139/ssrn.3315946

Dawei (David) Zhang

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

Gang Peng (Contact Author)

California State University Fullerton, Mihaylo College of Business & Economics ( email )

2550 Nutwood Ave
Fullerton, CA 92831
United States

Yuliang Yao

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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