AI: A cure for Baumol's disease?

The production of outputs in cultural industries, including film and television etc, is said to suffer from Baumol’s disease in that, because of its emphasis on creative labour elements which cannot readily be mechanised, replicated by computers nor streamlined, it is prone to above-average inflation. However, recent developments in generative AI, with its capacity to assist in generating text, images and sound, have established unprecedented opportunities to automate and support aspects of creative work across media industries. What does this imply for Baumol’s cost disease? This paper examines recent developments in AI, and analyses to what extent, by potentially reducing costs and raising productivity in inflation-prone media content creation activities, these technologies challenge conventional theory and effectively counteract Baumol’s disease.