The impact of artificial intelligence on employment: A panel data analysis for selected countries

Various artificial intelligence technologies such as machine learning, deep learning, robotics, and automation, which are the common denominator of the Fourth and Fifth Industrial Revolution, have developed rapidly in recent years and their use has become increasingly widespread in all areas that can affect the economy. These technologies have the capacity to facilitate the production process, increase productivity, affect trade and economic growth, as well as employment and inequality. The rise of artificial intelligence has sparked widespread debate, particularly regarding its potential impact on employment dynamics. There are concerns about the potential erosion such as displacement of labor with the development and diffusion of artificial intelligence, but it is also argued that artificial intelligence will increase new job opportunities and human skills by creating new roles in terms of jobs, occupations, and tasks. In this context, the study analyzed the effect of artificial intelligence on employment in 29 countries from 2017 to 2021 using the System-GMM estimator. The results showed a statistically significant positive effect, as indicated by the positive coefficient sign at the 1% level. The analysis also considered the potential impact of labor productivity on employment in relation to artificial intelligence technologies by including an interaction term in the same model. Based on the estimation results, it appears that while artificial intelligence and labor productivity have a positive effect on employment when considered separately, the interaction term, which results from the multiplication of these two variables, reduces this positive effect.