Over the course of the 2010s, occupations that are potentially more exposed to technologies enabled by artificial intelligence (AI) increased their employment share in Europe. This was particularly the case for occupations with a relatively higher proportion of younger and skilled workers.

These are the central findings of new research by Stefania Albanesi, António Dias da Silva, Juan Francisco Jimeno, Ana Lamo and Alena Wabitsch. For AI’s impact on wages, the evidence in their study is less clear and varies between neutral and slightly negative. The research team also warn that their results need to be taken with caution: AI-enabled technologies continue to be developed and adopted – and most of their effects on employment and wages are yet to be realised.

The study examines the link between AI-enabled technologies and employment shares in 16 European countries over the period 2011-19. These years coincide with the rise of deep learning applications such as language processing, image recognition, algorithm-based recommendations and fraud detection. Those are more limited in scope than the current generative AI models such as ChatGPT. Bu deep learning applications are revolutionary and still trigger concerns about their job impacts.

The researchers analyse data at the 3-digit occupation level (according to the International Standard Classification of Occupations) from the Eurostat’s Labour Force Survey and two proxies of potential AI-enabled automation. The first proxy links advances in specific applications of AI to abilities required for each occupation as described in O*NET. The second is a measure of the exposure of tasks and occupations to AI, which quantifies the text overlap of AI patents descriptions and job descriptions from O*NET.

According to these data, 23-29% of total employment in the European countries is in occupations highly exposed to AI-enabled automation, mostly ones that employ high-skilled, high-paid workers, in contrast with other technologies such as software. The study finds a positive association between AI-enabled automation and changes in employment shares in the sample of European countries.

Technology-enabled automation might also induce changes in the relative shares of employment along the skill distribution and thus affect earnings inequality. Previous research on job polarisation shows that medium-skilled workers in routine-intensive jobs were replaced by computerisation. In contrast, it is often argued that AI-enabled automation is more likely to complement or replace jobs in occupations that employ high-skilled labour.

The researchers find that AI-enabled automation is associated with employment increases in Europe, mostly for high skill occupations and younger workers. This is at odds with evidence from previous technology waves, when computerisation decreased the relative share of employment of medium-skilled workers resulting in polarisation.

The results show heterogeneous patterns across countries. The positive impact of AI-enabled automation on employment holds across countries with only a few exceptions. But the magnitude of the estimates varies substantially across countries, possibly reflecting differences in underlying economic factors, such as the pace of technology diffusion and education, but also in the level of product market regulation (competition) and employment protection laws.

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New Technologies and Jobs in Europe

Authors:

Stefania Albanesi (University of Pittsburgh, NBER and CEPS)
António Dias da Silva (Directorate General Economics, European Central Bank)
Juan Francisco Jimeno (Banco de España, Universidad de Alcalá, CEMFI, CEPR and IZA)
Ana Lamo (Directorate General Research, European Central Bank)
Alena Wabitsch (University of Oxford)