The Economic Influence of Artificial Intelligence on Labour Markets

Abstract

Artificial intelligence (AI) is disrupting global labour markets, providing both opportunities and challenges. Although AI offers various opportunities in the labour market, such as automating routine tasks, improving productivity, and creating new jobs, its utilization also poses threats and challenges, including worker displacement and exacerbating inequality. Hence, this article explores the economic impact of AI within the context of employment, wages, and skills, while simultaneously focusing on the opportunities brought by AI, such as innovation in the labour markets. The study follows a mixed-method approach, combining econometric analysis of employment data across OECD countries, case study analysis of industries adopting AI, such as manufacturing and healthcare. In the automated sectors, findings reveal that the integration of AI into the production process has increased productivity by over 15%, creating new job opportunities in AI-driven fields; however, job displacement increased significantly as a result, particularly for low-skilled workers, while wage inequality increased by 8%. This study proposes a framework for balancing innovation brought by AI with social costs, putting more emphasis on workers to acquire tech-driven skills for economic relevance and policymakers to ensure inclusivity. The study contributes significantly to the academic discourse by addressing policy gaps and measuring AI’s labour market effects. Practically, the study recommends investment in tech-driven skills, universal basic income (UBI) pilots, and development of AI governance frameworks.