Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307340 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11410
Publisher: 
CESifo GmbH, Munich
Abstract: 
How exposed is the labour market to ever-advancing AI capabilities, to what extent does this substitute human labour, and how will it affect inequality? We address these questions in a simulation of 711 US occupations classified by the importance and level of cognitive skills. We base our simulations on the notion that AI can only perform skills that are within its capabilities and involve computer interaction. At low AI capabilities, 7% of skills are exposed to AI uniformly across the wage spectrum. At moderate and high AI capabilities, 17% and 36% of skills are exposed on average, and up to 45% in the highest wage quartile. Examining complementary versus substitution, we model the impact on side versus core occupational skills. For example, AI capable of bookkeeping helps doctors with administrative work, freeing up time for medical examinations, but risks the jobs of bookkeepers. We find that low AI capabilities complement all workers, as side skills are simpler than core skills. However, as AI capabilities advance, core skills in lower-wage jobs become exposed, threatening substitution and increased inequality. In contrast to the intuitive notion that the rise of AI may harm white-collar workers, we find that those remain safe longer as their core skills are hard to automate.
Subjects: 
labour market
artificial intelligence
employment
inequality
automation
ChatGPT
GPT
LLM
wage
technology
JEL: 
E24
E51
G21
G28
J23
M48
O30
O33
Document Type: 
Working Paper
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