AI, Output, and Employment

Andrew Johnston and Christos A. Makridis

No 12579, CESifo Working Paper Series from CESifo

Abstract: Does artificial intelligence (AI) increase productivity - and does it displace workers? We examine aggregate effects using administrative data covering essentially all U.S. employers in a difference-in-differences design exploiting occupational AI exposure across industries and states. A one standard deviation increase in exposure raises output by 7%, with effects emerging in 2021 when enterprise AI tools entered the market. Employment effects follow the same timing but diverge by exposure type: where AI likely requires human collaboration, employment rises 4%; where AI can perform tasks independently, we find no significant employment effect. Results are robust to state-by-year and industry-by-year fixed effects and suggest AI has caused a decrease in the labor share of income.

Keywords: artificial intelligence; generative AI; aggregate productivity; labor market; technological change (search for similar items in EconPapers)
JEL-codes: E24 J23 J24 O33 O47 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12579

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