Advancing AI Capabilities and Evolving Labor Outcomes

TL;DR

This paper analyzes how advances in AI capabilities impact the US labor market, revealing that higher AI exposure correlates with reduced employment, shorter work hours, and demographic-specific employment shifts.

Contribution

It introduces a dynamic Occupational AI Exposure Score based on task-level AI assessments and links it to real-time labor market data, providing novel insights into AI's labor effects.

Findings

Higher AI exposure linked to reduced employment and shorter work hours.

Occupations with complex reasoning tasks are more affected by AI.

Effects vary across demographics and occupational task content.

Abstract

This study investigates the labor market consequences of AI by analyzing near real-time changes in employment status and work hours across occupations in relation to advances in AI capabilities. We construct a dynamic Occupational AI Exposure Score based on a task-level assessment using state-of-the-art AI models, including ChatGPT 4o and Anthropic Claude 3.5 Sonnet. We introduce a five-stage framework that evaluates how AI's capability to perform tasks in occupations changes as technology advances from traditional machine learning to agentic AI. The Occupational AI Exposure Scores are then linked to the US Current Population Survey, allowing for near real-time analysis of employment, unemployment, work hours, and full-time status. We conduct a first-differenced analysis comparing the period from October 2022 to March 2023 with the period from October 2024 to March 2025. Higher exposure to AI is associated with reduced employment, higher unemployment rates, and shorter work hours. We also observe some evidence of increased secondary job holding and a decrease in full-time employment among certain demographics. These associations are more pronounced among older and younger workers, men, and college-educated individuals. College-educated workers tend to experience smaller declines in employment but are more likely to see changes in work intensity and job structure. In addition, occupations that rely heavily on complex reasoning and problem-solving tend to experience larger declines in full-time work and overall employment in association with rising AI exposure. In contrast, those involving manual physical tasks appear less affected. Overall, the results suggest that AI-driven shifts in labor are occurring along both the extensive margin (unemployment) and the intensive margin (work hours), with varying effects across occupational task content and demographics.