Displacement Risk: the Impact of Artificial Intelligence on Occupational Earnings

Abstract

Occupational displacement risk resulting from technological innovations has always been a significant source of anxiety in the labor force. In the last few years, the rapid development of artificial intelligence has profoundly influenced productivity and economic growth worldwide. The displacement risk of occupations by artificial intelligence has become the key focus of social individuals. More predictions and analyses have demonstrated artificial intelligence's effects on the labor market, organization structure, job tasks, and skills, but less clear on occupational displacement risk and earnings. To examine how the occupational displacement risk by artificial intelligence impacts occupational earnings, our empirical analysis's primary hypothesis is that different occupations have different probability displaced by artificial intelligence, and the variation will manifest in the occupational earnings. We have implemented regression analysis approaches to study the relationship of occupational displacement risk and occupational earnings, based upon the data and information from Occupational Information Network (O*NET) and Occupational Employment Statistics (OES) of the U.S. Department of Labor over the period 2013-2019. Findings indicate that occupational displacement risk has negatively impacted occupational earnings. And occupational earnings have been positively impacted by occupational characteristics. Simultaneously, the results have still performed significantly even after controlling for both year and occupational categories and remain the same after robustness checks. According to heterogeneity analysis, the negative effect of occupational displacement risk has performed more clearly within the groups of medium and high occupation level, STEM discipline, and high earnings. Therefore we propose establishing the basic income support, implementing active labor market policies, and filling the labor skills gap for policy recommendations.