Artificial Intelligence and the Future of Work: Evidence and Policy Guidelines for Developing Economies

Pablo Egana-delSol () and Luis Vargas-Faulbaum
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Pablo Egana-delSol: Adolfo Ibanez University
Luis Vargas-Faulbaum: Adolfo Ibanez University

No 216, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: This article offers a comprehensive review of Artificial Intelligence's (AI) effects on global labour markets, with a particular focus on developing economies. Drawing on an extensive body of evidence, it demonstrates that AI's disruptive potential diverges markedly from earlier waves of automation, extending its reach into occupations once deemed insulated - especially those demanding advanced education and complex cognitive abilities. The analysis reveals significant in AI exposure across countries at different development stages and among workers distinguished by skill sets, educational attainment, age, and gender, underscoring its unequal distributional consequences. To harness AI's benefits while safeguarding vulnerable groups, we propose four strategic policy levers: bolstering digital infrastructure, expanding vocational training and lifelong upskilling programmes, formalising labour markets, and integrating AI tools within social protection delivery. Collectively, these measures foster a human centred adoption of AI, bridge the digital divide, and promote inclusive growth, thereby mitigating adverse impacts on employment and wages.

Keywords: artificial intelligence; labour market; inequality; automation; social protection (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 O1 O33 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2025-07
New Economics Papers: this item is included in nep-ain, nep-ict, nep-lam and nep-lma
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