The Externalities of ChatGPT in Labor Markets, Productivity, and Resource Allocation
Mariyah Matawala · International Journal of Finance Insurance and Risk Management · 1 Nov 2026
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- Will AI actually boost productivity and growth? · its finding: it depends (why studies differ)
- Will AI destroy more jobs than it creates? · its finding: it depends (why studies differ)
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Abstract
Purpose: The rapid development and widespread adoption of artificial intelligence (AI) technologies, particularly ChatGPT, have significantly influenced various sectors of the economy by reshaping labor markets, productivity, and resource allocation.This study aims to examine the extent to which the widespread use of ChatGPT generates both positive and negative externalities in these three areas and to provide a multifaceted assessment of its broader economic impact. Design/Methodology/Approach:The study adopts a secondary-data research approach based on a systematic evaluation of academic studies, institutional reports, and other credible sources concerning ChatGPT and generative AI.The analysis examines the changes associated with ChatGPT in labor markets, productivity, and resource allocation.Economic models, theoretical reasoning, and the concept of externalities are employed to identify and evaluate the positive and negative consequences associated with the adoption and use of technology.Findings: The findings indicate that ChatGPT generates important positive externalities by increasing productivity through the rapid generation of ideas and solutions and by facilitating more efficient and streamlined communication.It also improves the utilization of labor by automating repetitive tasks and supporting decision-making processes.In addition, ChatGPT can contribute to more efficient resource allocation by reducing certain forms of waste and inefficiency and by facilitating rapid access to relevant information.However, the analysis also identifies significant negative externalities.These include potential productivity losses resulting from inaccurate information and quality concerns, job displacement associated with automation and skills mismatches, challenges related to worker retraining and labor-market adjustment, and environmental pressures arising from the increasing resources required to support AI technologies.Practical Implications: The findings highlight t
About this publication
Unranked journal. A journal that is not on the economics or computer-science rankings this guide uses. That says nothing about one paper, but no ranking vouches for the journal’s review.
- Published
- 2026 (recently)
- Citations
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