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(Photo: МИХАИЛ РУДЕНКО/iStock by Getty Images) The pace at which artificial intelligence is transforming jobs is astounding, but while it boasts higher productivity AI is also increasing wage inequality. When workers are replaced by machines, real wages decline, and the owners of capital prosper. So who owns AI and how should its benefits be distributed? In this podcast, the IMF's Andrew Berg and Maryam Vaziri discuss AI’s inequality problem, the subject of their article in December’s special AI edition of Finance and Development magazine. Berg is Deputy Director, and Vaziri is an economist, both in the IMF Institute for Capacity Development.    Listen to the podcast on: IMF.org | Apple Podcasts | Spotify | Soundcloud | Libsyn | Google Podcasts   Read the transcript     Thanks for listening to the podcast. We're always looking to improve your experience so let us know if you have any suggestions! Send your comments to me at bedwards2@imf.org.   Bruce Edwards Producer, IMF Podcasts

Latin America and the Caribbea How Climate Shocks Are Linked to Cross-Border Migration in Latin America and the Caribbean Photo Credit: Joa_Souza/iStock by Getty Images Read this article in Spanish. Cross-border migration and climate shocks have been shaping the economies of the countries in Latin America and the Caribbean (LAC) for many decades. Globally, LAC is one of the regions with the largest migrant populations—measured as a share of the population of origin country. This region is also among those most susceptible to climate events including hurricanes, storms, floods, and droughts. This climate-migration nexus is especially critical for the region’s two sub-groups of smaller economies: the Caribbean and Central America, Panama, and the Dominican Republic (CAPDR). Our analysis sheds light on different drivers of cross-border migration, the importance of climate shocks, and impact of climate-induced migration on the economies in the region. Drivers of migration Migration occurs due to many factors, including difference in pay between jobs in home countries and foreign countries, migration policy, and social safety nets. Using a novel methodology, our analysis on climate and cross-border migration helps explain outward migration patterns over the past few decades. We decomposed the drivers of migration into three groups: origin-country; destination-country; and global factors. We find that the origin-country factors have become more prominent in the LAC region, especially in the smaller economies of the Caribbean and CAPDR, making them a more important driver of total migration outflows. Among others, social safety nets may have also become more strained across the region due to rising climate shocks, thereby raising the importance of origin-country factors. Role of climate shocks Climate disasters significantly impact total migration through conditions in countries of origin, according to our research. In fact, three additional climate disasters annually, over a five-year period, can be associated with about a 1 percent increase in people leaving their home countries in the Caribbean and CAPDR. Comparatively, the impact in South America and Mexico is relatively smaller, ranging between ¼ and 1/3 percent. Economic impact Climate shocks affect the economy through many channels, including damage to physical infrastructure, lower agricultural crop yields and poorer workers’ health and productivity. However, human displacement is a critical transmission channel.  For instance, our analysis finds that about 1/5 of climate’s overall impact on agricultural output in the countries in the Caribbean and CAPDR is due to climate-induced labor movement. Climate-induced migration is also associated with higher remittances to home countries, which somewhat mitigates the adverse impact on these countries. But countries should not excessively rely on remittances, as they may not be available when needed. The increasing frequency and impact of climate shocks calls for urgent strengthening of policy responses and programs to build resilience and mitigate the impact of climate shocks on the population, including by reinforcing social safety nets. **** Paula Beltran is an Economist and Metodij Hadzi-Vaskov is Assistant to the Director in the Western Hemisphere Department. RELATED LINKS Climate and Migration Regional Economic Outlook Climate Shocks and Cross-Border Migration

Dear maria, In today's edition, we highlight: Kristalina Georgieva on climate change and global outlook The macroeconomics of AI Financial crime Green returns Interest rate anxiety

CLIMATE CHANGE Climate Risks Are Macro Critical (Credit: IMF) Climate risks are macro critical, hitting economies, communities and households, and they can cause financial instability, Kristalina Georgieva told a session at the UN Climate Change, or COP28. Global commitments for this decade add up to a cut in emissions of carbon and other greenhouse gases of just 11 percent, well below the cuts of between 25 percent and 50 percent needed to limit global warming to 1.5 degrees Celsius by 2050, IMF research shows. “We believe that with a strong package of measures—including a carbon price, elimination of harmful subsidies, and policy support to accelerate decarbonization—we can still have the impact we need by 2030,” Georgieva told a forum of business leaders at the conference in Dubai. Also read the managing director’s conversation with World Bank president Ajay Banga about climate cooperation, remarks on carbon pricing, and a joint article for the Financial Times (paywall) on carbon markets with European Commission president Ursula von der Leyen and WTO director-general Ngozi Okonjo-Iweala. See more IMF blogs, events, videos and other content from COP28 covering the Paris Agreement, climate finance, green growth, and much more at our dedicated website and YouTube channel. IMF at COP28

MANAGING DIRECTOR INTERVIEW Global economic outlook

The outlook for the global economy has improved in recent months, Kristalina Georgieva told Council of Foreign Relations president Michael Forman in a wide-ranging discussion on Wednesday. But slower medium-term economic growth, a divergence between stronger- and weaker-performing economies, and fragmentation that hinders international cooperation remain concerns, Georgieva said.

FINANCE & DEVELOPMENT MAGAZINE The Macroeconomics of Artificial Intelligence (Credit: Jun Cen) AI can develop in very different directions—affecting productivity growth, income inequality, industrial concentration, and much more. The future that emerges will be a consequence of many things, including technological and policy decisions made today, write Stanford’s Erik Brynjolfsson and Gabriel Unger in F&D. The December issue of F&D focuses on Artificial Intelligence: What AI means for economics. Read articles by Gita Gopinath, Daron Acemoglu, Simon Johnson, Ian Bremmer, Mustafa Suleyman, Daniel Björkegren, Joshua Blumenstock, Anton Korinek, Hélène Landemore, Nandan Nilekani, Tanuj Bhojwani, Andrew Berg, Chris Papageorgiou, Maryam Vaziri, Robert Horn, Jeremy Wagstaff, Kerry Dooley Young, Eswar Prasad, Anil Ari, Lev Ratnovski, Christopher Evans, Marika Santoro, Martin Stuermer, Gita Bhatt, and many more. Read the new issue

There’s no question that Artificial Intelligence will increase productivity—but at what cost? Daniel Susskind has written two thought-provoking books on how AI is changing the nature of work and what tomorrow’s labor market will look like. In this podcast, Susskind speaks with journalist Rhoda Metcalfe about how encouraging technologies that complement rather than substitute human work would place fewer livelihoods at risk.

FINANCIAL CRIME Financial Crimes Hurt Economies and Must be Better Understood and Curbed (Credit: Nikada/iStock by Getty Images) The fight against financial crime isn’t lost, but the world needs to do more to limit the economic impact of crime, Rhoda Weeks-Brown, the head of the IMF’s Legal Department writes in a blog. The international community has made significant progress toward strengthening safeguards against money laundering and terrorist financing, but the overall efforts are still broadly insufficient, Weeks-Brown and co-authors Carolina Claver and Chady El Khoury write. “Money laundering is a necessary component of the organized crime that too frequently spans borders, skirts taxes, funds terrorism and corrupts officials—and it comes with hefty macroeconomic costs,” they say. “Bad actors are also embracing new technologies on top of their traditional techniques, all of which makes economic growth less inclusive and sustainable, fueling inequality and informality.” The IMF recently reviewed its strategy on anti-money laundering and combatting the financing of terrorism. The goal is to better help our 190 member economies address these critical financial integrity issues. Read more.

Ensuring a lower-carbon future is not only necessary but also good for the economy, according to the latest climate scenarios from the Network for Greening the Financial System, a group of 127 central banks and financial supervisors working to manage climate risks and boost green investment. As the Chart of the Week shows, making an orderly transition to net zero by 2050 could result in global gross domestic product being 7 percent higher than under current policies. Read more

Weekly Roundup FRAGMENTATION Europe in a Fragmented World Gita Gopinath, the IMF’s first deputy managing director, spoke to the Financial Times’s Martin Sandbu about Europe’s place in a geopolitically fragmented world. The interview built on Gopinath’s remarks in Berlin last week and recent research by staff from the IMF’s European Department. FINTECH GenAI and Finance Technological advances and competitive pressures have fueled rapid adoption of artificial intelligence in the financial sector and this is set to accelerate with the recent emergence of generative AI. In a Fintech Note, IMF economists provide early insights into GenAI’s inherent risks and potential impact on the financial sector. FINTECH Crypto in Small Developing Economies Policymakers must develop policy responses to address risks posed by digital assets, IMF staff advise in a new Fintech Note. For instance, a foreign-currency denominated "stablecoin" can amplify currency substitution and capital outflows in response to negative shocks. The first line of defense is to maintain high-quality macroeconomic policy frameworks, guard against macro-financial vulnerabilities, and so minimize the preconditions for foreign currency substitution. MONETARY POLICY Interest Rate Anxiety An IMF staff paper finds that monetary policy affects people’s wellbeing. It looks at the reactions of people living in Germany to the monetary policy decisions of the European Central Bank between 2002 and 2018. Self-reported wellbeing falls when monetary policy is tightened, and increases when monetary loosening is announced, the paper finds. These observations have implications for central bank communications. FINANCIAL STABILITY Worldwide Measure of Financial Stress Financial crises are to economists what earthquakes are to geologists. But how can we measure these seismic economic shocks and their impact on financial and economic stability? In a recent paper, IMF staff construct a real-time continuous narrative measure of financial stress for 110 countries from 1967 to the present. HOUSING Is Housing Affordable? The price-to-income ratio is a widely used indicator of housing affordability but does not consider important factors such as the cost of financing. An IMF staff paper constructs a new measure of housing affordability that takes these factors into account and looks at the housing market in 40 countries from 1970 to 2021. Among the findings is that affordability improved in all countries during periods of lower interest rates and favorable economic conditions.

MARK YOUR CALENDAR

DECEMBER 11 | 10:30 AM ET Gita Gopinath on Global Outlook Gita Gopinath, the IMF's first deputy managing director, will speak on conflict, fragmentation, divergence and the world economy at the International Economics Association's World Congress in Colombia. Watch on IMF Live. DECEMBER 13 | 11:30 AM ET Somalia: A Sustainable Development Milestone Somlia’s finance minister Bihi Egeh, the director of the IMF’s Middle East and Central Asia department Jihad Azour, and the World Bank’s vice president of Eastern and Southern Africa Victoria Kwakwa will discuss Somalia’s path to debt relief and what it means for the country, its people, and the role of the international community.

Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.

Nick Owen Editor IMF Weekend Read nowen@IMF.org