AI and the Labor Market
Source: insight.kellogg.northwestern.edu
AI's Impact on Jobs
The question of whether artificial intelligence will take jobs is being examined. Research by Bryan Seegmiller and Dimitris Papanikolaou suggests how AI may affect the labor market. The researchers measured workers’ exposure to AI and its impact on employment across industries. Their findings indicate that AI’s effect on the labor market in the past decade was not as straightforward as initially assumed.
Jobs with higher AI exposure were likely to see a decrease in demand. However, workers in these jobs were often able to adjust by focusing on less exposed tasks and improving in those areas. Companies that used AI heavily often increased overall productivity and expanded their workforce.
Seegmiller says there are countervailing forces with AI. The findings suggest that to thrive, workers may need to shift to tasks that complement AI, such as big-picture thinking, communication, and collaboration. Flexibility will be important to mitigate AI's negative effects, according to Seegmiller.
Adapting to Technological Advances
Previous research by Seegmiller and colleagues found that technological advances in the late twentieth century negatively impacted mid-level wage jobs, as robots, software, and IT lowered demand for those workers. Some people struggled to adapt to new workplace requirements. Seegmiller and Papanikolaou, along with Menaka Hampole and Lawrence D.W. Schmidt, investigated whether similar upheavals might occur with AI.
Seegmiller says AI will shape the labor market in the coming decades. The team analyzed about 58 million LinkedIn profiles from 2014 to 2023 to determine how firms deployed AI. They compared AI functions to tasks described in O*NET, a database of job duties and skill requirements. If an AI function was similar to a task performed by people, that task was considered exposed to AI.
AI Exposure and Job Displacement
The team found that AI exposure was higher among higher-paying, white-collar jobs. Occupations with high exposure included financial specialists, life-science technicians, chemical engineers, and credit analysts. Manual labor jobs were the least exposed.
The researchers' model indicated that the relationship between AI and employment was nuanced. Jobs with a wide range of tasks that have different levels of exposure to AI, or high variance, reduced the likelihood of displacement because workers could adjust their responsibilities. For example, workers might spend more time strategizing or forming business relationships.
Seegmiller used AI to code an economic model, which freed him up to focus on other work, such as writing papers. He says the ability to focus on things he's now more productive in is good for him. Furthermore, firms that adopted AI saw increased productivity and workforce expansion.
The Net Effect of AI on Employment
The researchers found that the net effect of AI on employment was close to zero, especially for highly paid jobs. These workers were able to shift their focus to other tasks and were more likely to work at firms that used AI to increase productivity and employment growth. In fact, jobs at the top of the income scale saw a slight increase in employment share. Seegmiller says the effect of AI depends on the sum of these forces.
The net effect on employment share was negative for some highly paid jobs, including business, finance, and engineering. The team also saw declines in some lower-paid, manual jobs. AI-related factors explained about 14 percent of the changes in employment growth across all occupations during the study period.
Seegmiller says that jobs involving sifting through text, like legal occupations, might see more tasks automated, and software engineers might offload writing code to AI. The outcome will depend on workers’ flexibility and how companies use AI. Engineers could adapt by shifting to more high-level strategy. People should consider how to work in conjunction with AI rather than in competition with AI.