AI and the Labor Market: Productivity Driver or Job Killer?

Oliver Falck (), Clemens Fuest () and Yuchen Guo

No 61, EconPol Policy Reports from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: While estimates of AIʼs long-run productivity gains diverge widely, early signs of its labor market impacts can already be observed. Using administrative data for Germany and the EU Labour Force Survey, we track employment by occupational AI exposure since the arrival of generative AI in late 2022. We find no widespread job losses in exposed occupations. Their employment has held up or grown, continuing a divergence from less exposed occupations that predates the introduction of generative AI. Young workers are the exception, however. In Germany, employment of workers aged 20 to 24 has fallen relative to older workers, especially in highly exposed occupations. Across the EU-27, we find first indications of fewer early-career hires in occupations where AI can automate tasks. These patterns are emerging but match recent evidence for the United States. They provide an early indicator that is available before productivity gains appear in national accounts, and suggest that monitoring of AIʼs labor market effects should put particular emphasis on labor market entry.

Date: 2026
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