Artificial Intelligence and Employment: New Cross-Country Evidence

Abstract

Recent years have seen impressive advances in artificial intelligence (AI) and this has stoked renewed concern about the impact of technological progress on the labor market, including on worker displacement. This paper looks at the possible links between AI and employment in a cross-country context. It adapts the AI occupational impact measure developed by Felten, Raj and Seamans - an indicator measuring the degree to which occupations rely on abilities in which AI has made the most progress - and extends it to 23 OECD countries. Overall, there appears to be no clear relationship between AI exposure and employment growth. However, in occupations where computer use is high, greater exposure to AI is linked to higher employment growth. The paper also finds suggestive evidence of a negative relationship between AI exposure and growth in average hours worked among occupations where computer use is low. One possible explanation is that partial automation by AI increases productivity directly as well as by shifting the task composition of occupations toward higher value-added tasks. This increase in labor productivity and output counteracts the direct displacement effect of automation through AI for workers with good digital skills, who may find it easier to use AI effectively and shift to non-automatable, higher-value added tasks within their occupations. The opposite could be true for workers with poor digital skills, who may not be able to interact efficiently with AI and thus reap all potential benefits of the technology.