The Variable Impact of Artificial Intelligence on Labor: The Role of Complementary Skills and Technologies

Although artificial intelligence (AI) promises to spur economic growth, there is widespread concern that it may replace human labor. We investigate the link between AI and labor by creating a new measure that we call the AI Occupational Impact (AIOI). The AIOI measure links advances in specific applications of AI, such as image recognition, translation, or the ability to play strategic games, to workplace abilities and occupations. We use this measure to study the relationship between AI and wages, employment, and labor market polarization. We provide evidence that, on average, occupations impacted by AI experience a small but positive change in wages, but no change in employment. We also provide evidence that the positive correlation with wages is driven primarily by occupations with higher software skill requirements, and that higher-income occupations have a strong positive relationship between our measure of AI impact and both employment and wages. These findings suggest that access to complementary skills and technologies may play an important role in determining the impact of AI, and that AI has the potential to exacerbate labor market polarization.