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Large Language Models, Small Labor Market Effects
- vanschelven 1y agoAbstract reproduced here since loading times of ssrn.com were abysmal on my last click: We examine the labor market effects of AI chatbots using two large-scale adoption surveys (late 2023 and 2024) covering 11 exposed occupations (25,000 workers, 7,000 workplaces), linked to matched employer-employee data in Denmark. AI chatbots are now widespread—most employers encourage their use, many deploy in-house models, and training initiatives are common. These firm-led investments boost adoption, narrow demographic gaps in take-up, enhance workplace utility, and create new job tasks. Yet, despite substantial investments, economic impacts remain minimal. Using difference-in-differences and employer policies as quasi-experimental variation, we estimate precise zeros: AI chatbots have had no significant impact on earnings or recorded hours in any occupation, with confidence intervals ruling out effects larger than 1%. Modest productivity gains (average time savings of 3%), combined with weak wage pass-through, help explain these limited labor market effects. Our findings challenge narratives of imminent labor market transformation due to Generative AI.
- larrled 1y agoI am thinking about work from home recently. The shift to work from home only happened because of the pandemic, but it could have happened years earlier. Telecommuting was a thing since the early 2000’s, but widespread adoption of work from home policy lagged due to various frictions and the inertia of the past. I think ai adoption will be the same, a step function where there’s nothing, nothing but then all at once the major shift comes.
- vanschelven 1y agogood analogy... but one of the surprises about the big work-from-home shift was that there was an (equally big?) shift back soon after