Impact of Artificial Intelligence (AI) on the Labor Market in Developing Countries
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Date
2024
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Publisher
UMT, Lahore
Abstract
This study investigates the interplay between artificial intelligence (AI), technological
adoption, and economic variables, focusing on their implications for unemployment and economic
growth. Employing the Autoregressive Distributed Lag (ARDL) and Dynamic Ordinary Least
Squares (DOLS) methodologies, the study examines macroeconomic data to uncover long-term
determinants of unemployment. AI and machine learning (ML) adoption demonstrate a positive
association with reduced unemployment, reflecting their potential to generate new job
opportunities. Conversely, increased digitization through data science (DS) correlates with
decreased unemployment, underscoring the importance of digital skills in modern economies.
The key insights of this study shed light on the perspectives to existing literature, revealing
complex interactions between AI adoption, economic growth, and labor markets. While supporting
traditional economic theories on technological impacts, such as skill-based technological change
(SBTC), the findings also challenge some prevailing notions. Overall, this research underscores
the multifaceted nature of AI's economic impact, emphasizing the outcomes of the labor market in
the developing countries. It further suggests some more avenues for future research by considering
dynamics of technological adoption and economic outcomes