Labor market impacts of AI: A new measure and early evidence

The rapid diffusion of AI is generating a wave of research measuring and forecasting its impacts on labor markets. But the track record of past approaches gives reason for humility.

For example, a prominent attempt to measure job offshorability identified roughly a quarter of US jobs as vulnerable, but a decade on, most of those jobs maintained healthy employment growth. The government’s own occupational growth forecasts, while directionally correct, have added little predictive value beyond linear extrapolation of past trends. Even in hindsight, the impact of major economic disruptions on the labor market is often unclear. Studies on the employment effects of industrial robots reach opposing conclusions, and the scale of job losses attributed to the China trade shock continues to be debated. 1

In this paper, we present a new framework for understanding AI’s labor market impacts, and test it against early data, finding limited evidence that AI has affected employment to date. Our goal is to establish an approach for measuring how AI is affecting employment, and to revisit these analyses periodically. This approach won't capture every channel through which AI could reshape the labor market, but by laying this groundwork now, before meaningful effects have emerged, we hope future findings will more reliably identify economic disruption than post-hoc analyses.

Our work follows this task-based approach, incorporating measures of theoretical AI capability and real-world usage, before aggregating to occupations. 3

It is possible that the impacts of AI will be unmistakable. This framework is most useful when the effects are ambiguous—and could help identify the most vulnerable jobs before displacement is visible.

Causal inference is easier when the effects are large and sudden. The COVID-19 pandemic and accompanying policy measures caused economic disruption so stark that sophisticated statistical approaches were unnecessary for many questions. For example, unemployment jumped sharply in the early weeks of the pandemic, leaving little room for alternative explanations.

The impacts of AI, however, might be less like COVID and more like the internet or trade with China. The effects may not be immediately clear from aggregate unemployment data; factors like trade policy and the business cycle could cloud interpretations of trend lines.