Award-winning Research on the Labour Market Impact of Artificial Intelligence

The paper AI, Task Changes in Jobs, and Worker Reallocation (IZA DP No. 17554) by Christina Gathmann (LISER and IZA), Felix Grimm (LISER), and Erwin Winkler (University of Erlangen-Nürnberg and IZA) has been selected for the 2025 IZA Award for Innovative Research on a Pressing Public Issue (IRPPI). This prestigious award honours the best IZA Discussion Paper on an AI-related topic published in 2024. As artificial intelligence continues to reshape industries and employment landscapes, the IRPPI Award recognises groundbreaking research that enhances our understanding of these transformative shifts.

The study provides vital insights into how AI-driven changes in job tasks affect labour markets, focusing on worker reallocation and employment structures. By utilising novel patent-based measures of AI and robot exposure, the authors analyse individual survey data on job tasks and administrative records on worker careers. Their findings reveal that robots primarily reduce routine tasks, while AI impacts non-routine abstract tasks, such as information gathering, and simultaneously increases the demand for high-level routine tasks, like process monitoring. These shifts occur mostly within specific occupations and become more pronounced over time.

Despite relatively small displacement effects, the research highlights how workers respond by switching jobs, often transitioning to industries with lower AI exposure. The study also uncovers key wage disparities: low-skilled workers tend to experience wage losses due to AI-driven changes, whereas high-skilled incumbent workers generally see wage gains. These findings contribute to a nuanced understanding of AI’s role in shaping workforce dynamics, offering valuable insights for policymakers and industry leaders navigating the evolving labour market.

According to the selection committee, which includes Kristina McElheran (University of Toronto) and Andrew Oswald (IZA and University of Warwick), this award-winning research “represents the best of modern labour economics.” By shedding light on the nuanced effects of AI on employment, wages, and worker mobility, the study underscores the importance of proactive strategies to ensure an inclusive and adaptable labour market in the age of AI.