A study by Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch from the European Central Bank shows that during the deep learning boom of the 2010s, jobs potentially more exposed to AI-enabled technologies actually increased their employment share in Europe. The study also found that AI-enabled automation is associated with employment increases in Europe, particularly for high-skill occupations and younger workers. However, the impact of AI on wages is less clear, suggesting neutral to slightly negative impacts. The study concludes that the full impact of AI on employment and wages is yet to be seen.
The Impact of AI on Employment
Artificial Intelligence (AI) has made significant strides in various fields, including robotics, machine learning, natural language processing, and image recognition. This has led to a renewed debate on the impact of these new technologies on jobs. Historically, fears about labour redundancy due to technological innovation have been exaggerated. In fact, during the deep learning boom of the 2010s, occupations potentially more exposed to AI-enabled technologies saw an increase in their employment share in Europe. However, it remains uncertain whether the same trend will continue with new developments in AI-enabled technologies.
AI is a general-purpose technology that can automate work in virtually every occupation, contrasting with other technologies such as computerisation and industrial robotics, which only allow a limited set of tasks to be automated by implementing manually specified rules. The effect of AI-enabled technologies on jobs and wages is still evolving, with some studies suggesting that occupations more exposed to AI experience no significant impact on employment, while others argue that AI-enabled technologies are likely to have a greater impact on high-skilled workers.
AI and Employment in Europe
A recent study examined the link between AI-enabled technologies and employment shares in 16 European countries over the period 2011-19. This period saw the rise of deep learning applications such as language processing, image recognition, algorithm-based recommendations, and fraud detection. The data revealed that around 25% of all jobs in these European countries were in occupations highly exposed to AI-enabled automation. The degree of exposure is as much an opportunity as it is a risk, depending on whether the AI-enabled technologies will substitute or complement labour.
The study found a positive association between AI-enabled automation and changes in employment shares in these 16 European countries. Technology-enabled automation might also affect the relative shares of employment at different skill levels and thus impact earnings inequality. AI-enabled automation is more likely to complement or replace jobs in occupations that employ high-skilled labour.
AI and Wage Growth
Despite the positive impact on employment shares, neither AI or software exposure showed statistically significant effects on wages, except when using one measure, which indicates that occupations more exposed to AI have slightly worse wage growth. The impact of AI-enabled automation on employment holds true for most countries, with only a few exceptions. However, the scale of the impact varies substantially across countries, reflecting differences in underlying economic factors, such as the pace of technology diffusion and education, or the level of regulation in product and labour markets.
AI and Younger, Skilled Workers
AI-enabled automation appears to be more favourable for those occupations that employ relatively younger workers. Regardless of the AI indicator used, the estimated benefit for the younger group seems to be double that for the other age groups. AI-enabled automation is thus associated with employment increases in Europe – mostly for high-skill occupations and younger workers. This contrasts with the evidence from previous technology waves, when computerisation decreased the relative share of employment of medium-skilled workers, resulting in polarisation.
The Future of AI and Employment
During the deep learning boom of the 2010s, occupations potentially more exposed to AI-enabled technologies actually increased their employment share in Europe. Occupations with a relatively higher proportion of younger and skilled workers gained the most. For wages, the evidence is less clear and suggests neutral to slightly negative impacts. These results do not amount to an acquittal: AI-enabled technologies continue to be developed and adopted. Most of their impact on employment and wages – and therefore on growth and equality – has yet to be seen.
“During the deep learning boom of the 2010s, occupations potentially more exposed to AI-enabled technologies actually increased their employment share in Europe. Occupations with a relatively higher proportion of younger and skilled workers gained the most. For wages, the evidence is less clear and suggests neutral to slightly negative impacts. These results do not amount to an acquittal: AI-enabled technologies continue to be developed and adopted. Most of their impact on employment and wages – and therefore on growth and equality – has yet to be seen.” – Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch
“The empirical evidence on the effect of AI-enabled technologies on jobs and wages is still evolving. For example, both Felten et al. (2019) and Acemoglu et al. (2022) conclude that occupations more exposed to AI experience no significant impact on employment. However, Acemoglu et al. (2022) also find that AI-exposed establishments reduced non-AI and overall hiring. That would imply that while new tasks are being created, AI is also replacing human labour in a subset of tasks.” – Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch
“AI-enabled automation is thus associated with employment increases in Europe – mostly for high-skill occupations and younger workers. This is at odds with the evidence from previous technology waves, when computerisation decreased the relative share of employment of medium-skilled workers, resulting in polarisation.” – Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch
“Despite the results for employment shares, neither AI or software exposure showed statistically significant effects on wages, except when using the Felten et al. measure, which indicates that occupations more exposed to AI have slightly worse wage growth.” – Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch
Summary
“During the deep learning boom of the 2010s, jobs that were more exposed to AI-enabled technologies actually saw an increase in their employment share in Europe, particularly those with a higher proportion of younger and skilled workers. However, the impact on wages is less clear, suggesting neutral to slightly negative impacts, and the full effect of AI on employment and wages, as well as on growth and equality, is yet to be seen.”
- A recent study by Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch examines the impact of artificial intelligence (AI) on jobs in Europe.
- The study found that during the deep learning boom of the 2010s, occupations more exposed to AI-enabled technologies actually increased their employment share in Europe.
- AI breakthroughs have come in many fields, including robotics, supervised and unsupervised learning, natural language processing, machine translation and image recognition.
- AI is a general-purpose technology that can automate work in virtually every occupation, unlike other technologies such as computerisation and industrial robotics, which only allow a limited set of tasks to be automated.
- The study found a positive association between AI-enabled automation and changes in employment shares in 16 European countries.
- AI-enabled automation is associated with employment increases in Europe, mostly for high-skill occupations and younger workers.
- The impact of AI on wages is less clear, with evidence suggesting neutral to slightly negative impacts.
- The study concludes that it is too soon to reach a verdict on the overall impact of AI on employment and wages, as AI-enabled technologies continue to be developed and adopted.
