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The race to create robots that look, act and work like humans could see unemployment soar, welfare costs increase and may eventually bring the global economy to its knees.

That's the dystopian scenario put forward in a report looking at how machines will revolutionise the workplace in the not-so-distant future.

Economists created a simple model to plot a range of possible robot scenarios to see how the machines could impact national income, capital and quality of service.

Economists used a simulated economy to create a model plotting a range of possible robot scenarios. This model revealed the rise of robots will initially create a tech boom, but this boom will turn to bust as workers are forced from their jobs and don't have enough money to pay for the goods the robots are producing

In their paper Robots are Us: Some Economics of Human Replacement, lead researcher Seth Benzell said: 'Whether it's bombing our enemies, steering our planes, fielding our calls, rubbing our backs, vacuuming our floors, driving our taxis, or beating us at Jeopardy, it's hard to think of hitherto human tasks that smart machines can't do or won't soon do.'

With this in mind, Mr Benzell and his colleagues at the National Bureau of Economic Research asked whether 'human replacement' - the act of building better versions of ourselves - will deliver an economic utopia or leave us earning too little to buy the goods the robots are making?

Using a simulated economy, they found that the value of coders and developers will increase as the demand for smart machines rise.

As processes improve and technology advances the price to produce these machines will decline, which will deliver a 'tech boom'. This in turn will raise the demand for new code. 

But over time, the stock of so-called 'legacy code' will grow because so many people are working on the projects, causing an abundance. 

Plus this code will ultimately cause machines to become smarter and learn how to use the legacy code themselves. 

Using a simulated economy, the paper found the value of coders will increase as demand for machines rise. As tech advances, costs will decline to deliver a 'tech boom'. But over time, the stock of so-called 'legacy code' will grow causing demand for new code and high-tech workers to drop and see them replaced by robots

The eventual decline in jobs will limit what young people can save and invest. This means less capital will be available for the future generations and means production could actually fall over time, despite the fact machines are capable of producing goods more efficiently. A robot hotel employee in China is shown

SHOULD WE FEAR ARTIFICIAL INTELLIGENCE? ELON MUSK AND STEPHEN HAWKING WARNS OF POTENTIAL DANGERS 

Artificial Intelligence has been described as a threat that could be 'more dangerous than nukes'.

Now a group of scientists and entrepreneurs, including Elon Musk and Stephen Hawking, have signed an open letter promising to ensure AI research benefits humanity.

The letter warns that without safeguards on intelligent machines, mankind could be heading for a dark future. 

Stark warning: Professor Stephen Hawking says we must be vigilant about artificial intelligence

The document, drafted by the Future of Life Institute, said scientists should seek to head off risks that could wipe out mankind.

The authors say there is a 'broad consensus' that AI research is making good progress and would have a growing impact on society.

It highlights speech recognition, image analysis, driverless cars, translation and robot motion as having benefited from the research.

'The potential benefits are huge, since everything that civilisation has to offer is a product of human intelligence; we cannot predict what we might achieve when this intelligence is magnified by the tools AI may provide, but the eradication of disease and poverty are not unfathomable,' the authors write.

But it issued a stark warning that research into the rewards of AI had to be matched with an equal effort to avoid the potential damage it could wreak.

For instance, in the short term, it claims AI may put millions of people out of work.

In the long term, it could have the potential to play out like a fictional dystopias in which intelligence greater than humans could begin acting against their programming.

This will cause demand for new code and, thus for high-tech workers, to drop and see such workers replaced by robot employees. 

'The resulting tech bust reflects past humans obsolescing current humans. These robots contain the stuff of humans - accumulated brain and saving power,' said the paper.

'In fact, high-tech workers can start out earning far more than low-tech workers, but end up earning far less.' 

The paper uses the example of Junior, the reigning World Computer Chess Champion. Junior can beat every current and, possibly, every future human on the planet.

Consequently, his old code has largely put new chess programmers out of business. 

The eventual decline in high-tech and, potentially, low-tech workers income will limit what young people can save and invest, continued the paper.

This means less capital will be available for the future generations and production could actually fall over time, despite the fact machines are capable of producing goods more efficiently.

An alternative outcome of this is that high-skilled workers will move into low-skilled, lower paid positions, which will force these low-skilled workers into unemployment. And once people are out of work, welfare costs will rise putting a greater strain on the economy. The authors suggest people start saving for this eventuality

An alternative outcome of this is that high-skilled workers will move into low-skilled, lower paid positions, which will force these low-skilled workers into unemployment.  

And once people are out of work, welfare costs will rise putting a greater strain on the economy. The authors even suggest people start saving for this eventuality.

'The long run in such cases is no techno-utopia. Yes, code is abundant. But capital is dear. And yes, everyone is fully employed. But no one is earning very much,' said Mr Bezell. 

'In short, when smart machines replace people, they eventually bite the hands of those that finance them.'

ARE THE PREDICTIONS ALREADY COMING TRUE?

The 'Robear' has a cub-like face but packs enough strength to transfer patients from a wheelchair (pictured) or a floor-level bed to a bath, for example

A recent report by management consulting firm Boston Consulting Group predicted by 2025 the number of 'automatable' tasks will rise to 25 per cent.

This will lead to robots replacing many human jobs - and is a trend that has already begun in Japan. 

Earlier this week Riken-SRK Collaboration Centre for Human-Interactive Robot Research in Nagoya, Japan unveiled its latest Robear. 

The 'Robear' has a cub-like face but has enough strength to transfer patients from a wheelchair or a floor-level bed to a bath. 

It weighs 309lb (140kg) with extending legs that stop the 'bear' from falling over and it moves slowly and smoothly thanks to advance actuators in its mechanical arms.

And at the start of the month, Mitsubishi UFJ Financial Group said it will begin employing a humanoid called Nao in its branches from April, on a trial basis. 

And if the trial is successful, the robotic employees will be rolled out to more branches of the Japanese bank by 2020. 

Elsewhere, in China there is a hotel manned entirely by robots. 

From reception desk staff to security doormen and waiters, the Pengheng Space Capsules Hotel in Shenzhen, China, has built, rather than hired, new employees.

Start-up costs and robot maintenance aside, staff bills are minimal and the hotel can pass these savings back to the customer as a night's stay costs just £6.80 per night. 

The study's model firmly predicts three things - a long-run decline in the share of labour income, techbooms followed by tech-busts, and a growing dependency of current output on past software investment. 

'Our simple model illustrates the range of things that smart machines can do for us and to us,' continued the paper. 

'Its central message is disturbing. Absent appropriate fiscal policy that redistributes from winners to losers, smart machines can mean long-term misery for all.'

This study follows a similar report by management consulting firm Boston Consulting Group that predicted by 2025 the number of 'automatable' tasks will rise to 25 per cent.  

In turn, labour costs stand to drop by 16 per cent on average globally over that time. 

The shift will mean an increasing demand for skilled workers who can operate the machines, said Hal Sirkin, a senior partner at Boston Consulting.

Factory workers 'will be higher paid but there will be fewer of them,' Mr Sirkin said.

'The long run in such cases is no techno-utopia,' said the researchers. 'Code is abundant but capital is dear. Everyone is employed. But no one is earning very much. In short, when smart machines replace people, they eventually bite the hands of those that finance them.' A robot designed to replace a shop worker is pictured

Companies tend to start thinking about replacing workers when the costs of owning and operating a system come at a 15 per cent discount to employing a human counterpart.

For example, in the US automotive industry, which is predicted to be one of the more aggressive adopters of robots, a spot-welding machine costs $8 an hour versus $25 an hour for a worker.

A robot that can perform certain repetitive tasks costs about one-tenth as much as it did more than 10 years ago, Mr Sirkin said. 

Costs tied to one commonly used robotics system, a spot welder, are also expected to fall 22 percent between now and 2025.

Three-fourths of robot installations over the next decade are expected to be concentrated in four areas: transportation equipment, including the automotive sector; computer and electronic products; electrical equipment and machinery.

By 2025, robots should be able to handle 30 to 40 per cent of automatable tasks across multiple industries. 

Adoption will be slower in industries such as food products, plastics, fabricated metal, and wood products, where many tasks will remain difficult to automate and wages are relatively low. 

Thanks to technological advances, however, robots are making greater inroads in these industries as well.

'Regardless of whether it's time to invest in next-generation robots, manufacturers everywhere should start preparing,' added Mr Sirkin. 

'They need to understand how costs and automation technologies are changing in their industries and what their competitors are up to.