by István Kopácsi
In a new study[1] by the National Bureau of Economic Research, researchers in the US examined the relationship between the use of AI technologies, the workforce composition and organisational structure of firms. The analysis involved the comparison of huge datasets of employee resumes and job advertisements.
Two important overlaps in the relationship between workforce composition and the use of AI can be detected, depending on whether the focus is on the period before or after the introduction of AI. On the one hand, in the context of AI adoption, the analysis finds that firms with a high proportion of more educated workers, primarily with STEM (science, technology, engineering, and mathematics) degrees, are more likely to invest in AI. Thus, they suggest that the adoption of AI depends, at least in part, on the skills of the workforce employed by firms, but on the other hand, the researchers found evidence that the share of skilled workers and STEM workers continues to increase after AI adoption. Moreover, in contrast to previous automation technologies that displaced routine tasks, AI developments have not been associated with a decline in demand for workers performing predictive tasks, and in fact, workers with data analysis and IT skills are increasingly required.
In connection with the impact of AI on the structure of businesses, it can be seen that AI leads to a flatter hierarchical structure. This phenomenon can be explained by the fact that AI also helps non-managerial employees to become more predictive and decisive, which increases the autonomy of employees, which in turn causes a reduction in the demand for managerial positions, resulting in a flattening of the hierarchical structure.
With regard to the impact of AI on the labour market, it is worth pointing out that AI does not yet seem to be displacing the jobs that are generally predicted to be replaced (such as customer service, human resources and legal jobs). The results also suggest that there is a shift of skilled labour from firms not investing in AI to firms using AI, which could have implications for labour market reallocation and inequality between firms.
[1] Tania Babina, Anastassia Fedyk, Alex X. He, and James Hodson: Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition. NBER Working Paper No. 31325. June 2023. https://www.nber.org/papers/w31325
