Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 370: AI Unboxed and Jobs: A Novel Measure and Firm-Level Evidence from Three Countries

Erik Engberg, Holger Görg, Magnus Lodefalk, Farrukh Javed, Martin Längkvist, Natália Monteiro, Hildegunn Kyvik Nordås, Giuseppe Pulito, Sarah Schroeder and Aili Tang
Additional contact information
Erik Engberg: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Holger Görg: Kiel Institute
Magnus Lodefalk: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Farrukh Javed: Lund University
Martin Längkvist: Örebro University
Natália Monteiro: The Ratio Institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Giuseppe Pulito: Berlin School of Economics
Sarah Schroeder: Aarhus University, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Aili Tang: None

Abstract: We unbox developments in artificial intelligence (AI) to estimate how exposure to these developments affect firm-level labour demand, using detailed register data from Denmark, Portugal and Sweden over two decades. Based on data on AI capabilities and occupational work content, We develop and validate a time-variant measure for occupational exposure to AI across subdomains of AI, including language modelling. According to our model, white collar occupations are most exposed to AI, and espe- cially white collar work that entails relatively little social interaction. We illustrate its usefulness by applying it to near-universal data on firms and individuals from Swe- den, Denmark, and Portugal, and estimating firm labour demand regressions. We find a positive (negative) association between AI exposure and labour demand for high- skilled white (blue) collar work. Overall, there is an up-skilling effect, with the share of white-collar to blue collar workers increasing with AI exposure. Exposure to AI within the subdomains of image and language are positively (negatively) linked to demand for high-skilled white collar (blue collar) work, whereas other AI-areas are heterogeneously linked to groups of workers.

Keywords: Artificial intelligence; Labour demand; Multi-country firm-level evidence

JEL-codes: E24; J23; J24; N34; O33

Language: English

46 pages, December 27, 2023

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