AI Adoption Impact on Human Productivity and Job Displacement Simulation using System Dynamics Approach in R

This paper simulates the intricate relationship between the use of AI and productivity growth and displacement of human resource using System Dynamics in R. It incorporates these factors in its simulation across time horizon and the regression & correlation analysis to analyze relationships. The study shows that the use of AI has a positive effect on productivity while at the same time has a strongly negative effect on job displacement and also that job displacement has a negative effect of productivity. The analysis of regression finds moderate coefficient of determination (R² = 0.9885 and 0.9883) and the use of p-value < 0.05 proves the study hypotheses to be true. The evidence based upon the collected data is substantiated by visualizations, residual analysis, and correlation matrices to point towards the fact that the integration of AI in the workforce is a highly intricate process.