Artificial intelligence's creation and displacement of labor demand

Abstract

The paper explores the dynamics of labor demand creation and displacement from adopting artificial intelligence (AI) in US metropolitan statistical areas (MSAs). We combine unique online job postings and patent data to identify AI innovation and AI-skilled labor demand for specific industry sectors and locations. Our analysis shows that AI technologies are increasingly penetrating major industries and disproportionally generating new labor demand for AI-skilled workers in the MSAs in which AI innovation occurs. Our empirical model provides nascent evidence that demand for non-AI labor declines slightly in sectors and MSAs with higher AI skill adoption rates. This decline in labor demand is associated with non-routine cognitive analytical and inter-personal tasks in jobs not previously susceptible to displacement computerization.