How AI will reshape America’s economic landscape

Artificial Intelligence technology is poised to reshape the economic geography of America, with unexpected mid-sized cities potentially emerging as beneficiaries of AI adoption, according to new research by economists.

The key findings: A recent study by economists Scott Abrahams and Frank Levy identifies mid-sized cities in the Midwest, Mid-Atlantic, and South as potential winners in the AI economy.

• Chattanooga, Tennessee exemplifies the type of city that could benefit from broader AI adoption, despite not being a traditional tech hub
• These emerging cities share common characteristics: an educated workforce, affordable housing, and employment sectors less vulnerable to AI disruption
• The research suggests these locations are well-positioned to leverage AI for productivity gains, potentially attracting more residents and businesses

AI’s economic impact: Generative AI, which can perform complex tasks like writing reports and software code, is expected to significantly influence labor markets and population distribution across the United States.

• The technology’s transformative potential mirrors previous technological revolutions that reshaped American economy and politics
• Mark Muro, a Brookings Institution senior fellow, emphasizes the importance of anticipating AI’s geographic implications
• Generative AI’s capabilities extend to tasks previously considered uniquely human, from drafting business documents to answering complex queries

Workforce implications: The widespread adoption of AI technologies is expected to have varying impacts across different occupational sectors and regions.

• Call centers, software development, and business analysis roles may face significant disruption
• Cities with diversified economies and workers in AI-resistant sectors may have advantages in adapting to these changes
• The geographic distribution of work could shift as AI enables new patterns of economic activity and employment

Future outlook: The redistribution of economic opportunity through AI adoption could help revitalize previously struggling regions while creating new challenges for traditional tech hubs.

• The shift could lead to more geographically distributed economic growth
• Cities with the right combination of infrastructure, talent, and cost advantages may emerge as unexpected winners
• The transformation could help address long-standing regional economic disparities across the United States