Working Paper: NBER ID: w31325
Authors: Tania Babina; Anastassia Fedyk; Alex X. He; James Hodson
Abstract: We study the shifts in U.S. firms' workforce composition and organization associated with the use of AI technologies. To do so, we leverage a unique combination of worker resume and job postings datasets to measure firm-level AI investments and workforce composition variables, such as educational attainment, specialization, and hierarchy. We document that firms with higher initial shares of highly-educated workers and STEM workers invest more in AI. As firms invest in AI, they tend to transition to more educated workforces, with higher shares of workers with undergraduate and graduate degrees, and more specialization in STEM fields and IT skills. Furthermore, AI investments are associated with a flattening of the firms' hierarchical structure, with significant increases in the share of workers at the junior level and decreases in shares of workers in middle-management and senior roles. Overall, our results highlight that adoption of AI technologies is associated with significant reorganization of firms' workforces.
Keywords: No keywords provided
JEL Codes: D22; E22; J01; J23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| AI investments (C45) | changes in workforce composition (J21) |
| AI investments (C45) | increase in junior employees (M51) |
| AI investments (C45) | decrease in middle management roles (M54) |
| AI investments (C45) | decrease in senior management roles (M51) |
| AI investments (C45) | increase in employees with advanced degrees (J39) |
| AI investments (C45) | increase in share of employees with at least an associate or bachelor’s degree (I23) |
| AI investments (C45) | increase in share of employees with master’s degrees (I26) |
| AI investments (C45) | increase in share of employees with doctoral degrees (J39) |
| AI investments (C45) | decrease in share of workers without college education (J29) |
| AI investments (C45) | demand for higher-skilled labor (J24) |
| AI investments (C45) | decrease in demand for medium-skilled labor (F66) |