AI will likely never fully automate most jobs because the cost of making AI near-perfect is exponentially higher than just keeping humans to fix its mistakes.
April 1, 2026
Original Paper
Economics of Human and AI Collaboration: When is Partial Automation More Attractive than Full Automation?
arXiv · 2603.29121
The Takeaway
Standard thinking assumes technology eventually replaces labor once it's 'good enough.' This study shows that because AI accuracy has diminishing returns, firms hit a financial wall where partial human-AI collaboration is permanently cheaper than full automation.
From the abstract
This paper develops a unified framework for evaluating the optimal degree of task automation. Moving beyond binary automate-or-not assessments, we model automation intensity as a continuous choice in which firms minimize costs by selecting an AI accuracy level, from no automation through partial human-AI collaboration to full automation. On the supply side, we estimate an AI production function via scaling-law experiments linking performance to data, compute, and model size. Because AI systems e