Publication: Labor Demand in the Age of Generative AI: Early Evidence from the U.S. Job Posting Data
Loading...
Published
2025-11-18
ISSN
Date
2025-11-19
Editor(s)
Abstract
This paper examines the causal impact of generative artificial intelligence on U.S. labor demand using online job posting data. Exploiting ChatGPT’s release in November 2022 as an exogenous shock, the paper applies difference-in-differences and event study designs to estimate the job displacement effects of generative artificial intelligence. The identification strategy compares labor demand for occupations with high versus low artificial intelligence substitution vulnerability following ChatGPT’s launch, conditioning on similar generative artificial intelligence exposure levels to isolate substitution effects from complementary uses. The analysis uses 285 million job postings collected by Lightcast from the first quarter of 2018 to the second quarter of 2025Q2. The findings show that the number of postings for occupations with above-median artificial intelligence substitution scores fell by an average of 12 percent relative to those with below-median scores. The effect increased from 6 percent in the first year after the launch to 18 percent by the third year. Losses were particularly acute for entry-level positions that require neither advanced degrees (18 percent) nor extensive experience (20 percent), as well as those in administrative support (40 percent) and professional services (30 percent). Although generative artificial intelligence generates new occupations and enhances productivity, which may increase labor demand, early evidence suggests that some occupations may be less likely to be complemented by generative artificial intelligence than others.
Link to Data Set
Citation
“Liu, Yan; Wang, He; Yu, Shu. 2025. Labor Demand in the Age of Generative AI: Early Evidence from the U.S. Job Posting Data. Policy Research Working Paper; 11263. © World Bank. http://hdl.handle.net/10986/44004 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Rigging the Scores: Corruption through Scoring Rule Manipulation in Public Procurement Auctions(Washington, DC: World Bank, 2025-12-02)Public procurement is highly susceptible to corruption, especially in developing countries. Although open auctions are widely adopted to curb it, this paper finds that corruption remains prevalent even within this procurement format. Procurement officers can collaborate with firms to manipulate scoring rules, ensuring predetermined winners, while corrupt firms submit noncompetitive bids to meet minimum bidder requirements. Using extensive data from Chinese public procurement auctions, the paper introduces model-driven statistical tools to detect such corruption, identifying a corruption rate of 65 percent. A procurement expert audit survey confirms the tools’ reliability, with a 91 percent probability that experts recognize suspicious scoring rules when flagged. Firm-level analysis reveals that local, state-owned, and less productive firms are favored in corrupt auctions. Lastly, the paper explores policy implications. Analysis of the national anti-corruption campaign since 2012 suggests that general investigations may be insufficient to address deeply ingrained corrupt practices. Using counterfactuals based on an estimated structural model, the paper shows that implementing anonymous call-for-tender evaluations could improve social welfare by 10 percent by eliminating suspicious rules and encouraging broader participation.Publication Investment Policy Reforms and Foreign Direct Investment Inflows(Washington, DC: World Bank, 2025-12-01)Foreign direct investment has the potential to introduce much-needed capital and expertise in emerging and developing economies. To attract foreign direct investment, many countries have eased restrictions on foreign ownership in various sectors, reformed their institutions, and set up investment promotion agencies. Until the mid-2010s, Ethiopia remained one of the few countries that resisted this trend, with several stringent restrictions in place on foreign direct investment entry and operations in the country. This study employs a synthetic control method to examine patterns in foreign capital inflows following a series of investment policy reforms that were substantively introduced in the mid-2010s (circa 2015). The study offers evidence that investment policy reforms contributed to a significant foreign direct investment inflow in Ethiopia, compared to what would have occurred in the absence of these policies. An alternative strategy that conservatively specifies the donor country pool using an AI-assisted deep search technique changes the donor pool weighting matrix of the synthetic control method, but the estimated policy effects largely remain robust to this specification. The findings highlight the importance of targeted reforms in promoting foreign direct investment inflow in developing countries.Publication Pollution Intensity of Consumption: Exploring the Environmental Engel Curve Based on Micro-Data from 109 Countries(Washington, DC: World Bank, 2025-12-03)Environmental Engel curves characterize the relationship between the embodied environmental impact of household consumption choices and their respective income levels. Using detailed microdata from 109 countries across all income levels, this paper studies household expenditure shares on 11 fuel types that differ in their air pollution intensity. The findings show that wealthier households tend to shift away from dirty fuels and toward cleaner ones, although this transition is not guaranteed. In low-income countries, limited infrastructure and poor access to clean fuels slow this process, demonstrating that income alone cannot drive energy transitions. By documenting systematic variation in environmental Engel curves across income groups and national contexts, the paper emphasizes the joint role of income growth and infrastructure development. The analysis also reveals a dual burden of pollution in which richer households are the primary contributors to outdoor air pollution, while poorer households remain reliant on polluting fuels that increase their exposure to indoor air pollution.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Role of Social Media and User-Generated Content in Post-Conflict Peacebuilding(World Bank, Washington, DC, 2013-06)There is a growing body of practice and literature on the role of information and communication technologies (ICTs) in preventing and responding to violence. There is also a lot of excitement and corresponding literature about the role of the internet in non-violent change and democratization. The use of mobile phones, social networks such as Facebook and Twitter, and user-generated content (UGC) like blogs and YouTube videos in the protests in Tunisia and Egypt, as well as throughout the wider middle-east and North Africa (MENA) region have shown how ICTs can complement and augment the exercise of rights to freedom of expression, freedom of association, and freedom of peaceful assembly. This literature focuses on the use of ICTs before and during conflict, for example in conflict prevention and early warning. What about the use of ICTs in post-conflict situations; after the negotiation of peace agreements? How can ICTs be used in post-conflict interventions; more specifically in post-conflict peacebuilding and post-conflict reconstruction and recovery? What role of can be played here by social media and user-generated content?Publication Who on Earth Is Using Generative AI? Global Trends and Shifts in 2025(Washington, DC: World Bank, 2025-10-15)Nearly three years after ChatGPT’s launch, the generative artificial intelligence landscape remains in rapid flux. Using high-frequency website traffic data from Semrush, this paper tracks global adoption patterns for the 60 most-visited consumer-facing generative artificial intelligence tools through mid-2025. Five key findings emerge. First, fierce competition drives continuous innovation: two of 2025’s top five tools—DeepSeek and Grok—are new entrants, and development is rapidly diversifying into multi-modal capabilities, reasoning, and specialized applications. Second, ChatGPT maintains dominance despite competition, accounting for 77 percent of traffic to the top 60 tools in April 2025. Third, usage of generative artificial intelligence has exploded since mid-2024: ChatGPT traffic grew 113 percent year-over-year, driven by 42 percent user growth and 50 percent increased visits per user, with session duration doubling. Fourth, high-income countries are pulling decisively ahead, creating stark global divides. While 24 percent of internet users in high-income countries use ChatGPT, penetration drops to 5.8 percent in upper-middle-income countries, 4.7 percent in lower-middle-income countries, and just 0.7 percent in low-income countries. Regression analysis confirms that gross domestic product per capita strongly predicts adoption growth. Fifth, localization shapes competitive advantage: non-U.S. tools concentrate heavily in home markets, with Le Chat drawing 69 percent of traffic from Europe and several Chinese tools exceeding 90 percent domestic usage. These patterns reveal an artificial intelligence landscape characterized by intense innovation, persistent market leadership, accelerating growth, and deepening global inequality, underscoring the need for inclusive policies as generative artificial intelligence becomes central to economic participation.Publication International Economic Activities and the Demand for Skilled labor: Evidence from Brazil and China(World Bank, Washington, D.C., 2004-10)Increases in international economic integration can lead to greater specialization according to comparative advantage, but also to the diffusion of skill-biased technologies. In developing countries characterized by relative abundance of unskilled labor, these factors can have opposite effects on the relative demand for skilled labor. This paper investigates the impact of the use of imported inputs, exports and foreign direct investment on the demand for skilled workers of Brazilian and Chinese manufacturing plants. We find that while in Brazil increased levels of international integration are associated with an increased demand for skilled labor, the opposite is true in China.Publication From Technological Catch-up to Innovation : The Future of China’s GDP Growth(World Bank, Washington, DC, 2012-01-02)This report stats that income gaps among countries are largely explained by differences in productivity. By raising the capital/labor ratio and rapidly assimilating technologies across a wide range of activities, China has increased factor productivity manifold since 1980 and joined the ranks of middle income countries. With the launch of the 12th FYP, China has set its sights on becoming a high income country by 2030 through a strategy combining high levels of investment with rapid advances in technology comparable to that of Japan from the 1960s through the 1970s, and Korea s from the 1980s through the end of the century. The report concludes that the best bet is an innovation system anchored to and drawing its energy from a competitive national economy. Technological progress and the flourishing of innovation in China will be the function of a competitive, globally networked ecosystem constructed in two stages during 2011- 2030. Government technology cum competition policies will provide impetus in the first stage, but success will hinge on the quality of the workforce, the initiative and policies of firms, the emergence of supporting services.Publication Do Capital Incentives Distort Technology Diffusion? Evidence on Cloud, Big Data and AI(Washington, DC: World Bank, 2024-09-19)The arrival of cloud computing provides firms a new way to access digital technologies as digital services. Yet, capital incentive policies present in every OECD country are still targeted towards investments in information technology (IT) capital. If cloud services are partial substitutes for IT investments, the presence of capital incentive policies by unintentionally discourage the adoption of cloud and technologies that rely on the cloud, such as artificial intelligence (AI) and big data analytics. This paper exploits a tax incentive in the UK for capital investment as a quasi-natural experiment to examine the impact on firm adoption of loud computing, big data analytics and AI. The empirical results find that the policy increased investment in IT capital as would be expected; but it slowed firm adoption of cloud, big data and AI. Matched employer-employee data shows that the policy also led firms to reduce their demand for workers that perform data analytics, but not other types of workers
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, Fall 2025: Jobs and Prosperity(Washington, DC: World Bank, 2025-10-07)Economic growth in Europe and Central Asia eased to 2.4 percent in 2025, reflecting a sharp slowdown in the Russian Federation. Outside Russia, growth momentum remains broadly resilient, supported by private consumption, infrastructure spending, and a gradual recovery in trade. While a modest pickup is expected in 2026–27, growth is likely to remain well below the 2000–19 average. In this slow-growth environment, downside risks dominate, with the potential for setbacks in reforms posing a significant threat to investor confidence, private sector dynamism, and job creation. The region's labor market shows signs of resilience but faces deep-rooted structural challenges. Since the start of transition from planned to market in the early 1990s, employment has grown faster than the region's population, driven by rising labor force participation and a shift out of agriculture. Yet most new jobs are in low-productivity services, and productivity growth has stalled. Demographic pressures — aging, shrinking workforces, and emigration —add to the strain. Structural bottlenecks, including weak competition, limited access to finance, and outdated skills systems, constrain firm growth and innovation. The report calls for a three-pillar reform agenda: invest in foundational infrastructure for jobs, strengthen the business environment, and mobilize private capital. Targeting five priority sectors—manufacturing, agribusiness, tourism, healthcare, and energy—can help turn growth into better jobs and shared prosperity.Publication The World Bank Group Annual Report 2025(Washington, DC: World Bank, 2025-10-09)The World Bank Group Annual Report 2025 presents on World Bank Group activities in fiscal 2025. The Annual Report is prepared by the Executive Directors of ICSID, IFC, MIGA, and the World Bank (IBRD/IDA) in accordance with the by-laws of the institutions. The President of the World Bank Group and Chairman of the Board of Executive Directors submit the Annual Report, together with the accompanying administrative budgets and audited financial statements, to the Board of Governors.Publication South Asia Development Update, October 2025: Jobs, AI, and Trade(Washington, DC: World Bank, 2025-10-07)Growth in South Asia is on track to exceed earlier expectations and reach 6.6 percent in 2025, but is expected to slow to 5.8 percent in 2026. While this short-term outlook is subject to downside risks, over the longer term, artificial intelligence (AI) could promote growth by boosting productivity especially among those 15 percent of South Asian workers who are in jobs where AI strongly complements human labor. Such a growth dividend could be amplified by trade reforms. Carefully sequenced tariff cuts, especially in conjunction with broader free trade agreements, would encourage private investment and job creation in trade-related activities, which disproportionately employ South Asia’s younger and higher-skilled workers and have accounted for most of South Asia’s employment growth over the past decade. This could particularly benefit manufacturing, where elevated tariffs on production inputs currently diminish competitiveness. South Asia’s governments can support the adjustment of labor markets to new technologies and trade opportunities by proactively removing obstacles to workers’ reallocation to new firms, occupations, and locations. Simultaneously, they could protect vulnerable workers during this period of change by streamlining and strengthening safety nets.Publication Women, Business and the Law 2024(Washington, DC: World Bank, 2024-03-04)Women, Business and the Law 2024 is the 10th in a series of annual studies measuring the enabling conditions that affect women’s economic opportunity in 190 economies. To present a more complete picture of the global environment that enables women’s socioeconomic participation, this year Women, Business and the Law introduces two new indicators—Safety and Childcare—and presents findings on the implementation gap between laws (de jure) and how they function in practice (de facto). This study presents three indexes: (1) legal frameworks, (2) supportive frameworks (policies, institutions, services, data, budget, and access to justice), and (3) expert opinions on women’s rights in practice in the areas measured. The study’s 10 indicators—Safety, Mobility, Workplace, Pay, Marriage, Parenthood, Childcare, Entrepreneurship, Assets, and Pension—are structured around the different stages of a woman’s working life. Findings from this new research can inform policy discussions to ensure women’s full and equal participation in the economy. The indicators build evidence of the critical relationship between legal gender equality and women’s employment and entrepreneurship. Data in Women, Business and the Law 2024 are current as of October 1, 2023.Publication World Bank East Asia and Pacific Economic Update, October 2025: Jobs(Washington, DC: World Bank, 2025-10-07)GDP growth in the East Asia and Pacific (EAP) region remains above the global average but is projected to slow down in 2025 and even further in 2026. The sluggishness is due to a less favorable external environment—rising trade restrictions, easing but still elevated global uncertainty, and slowing global growth—as well as persistent domestic difficulties. Today, many people are in low-productivity or informal jobs, and many of the young cannot find any jobs. The class of people vulnerable to falling into poverty is now larger than the middle class in most countries. In a region that thrived because export-oriented, labor-intensive growth created more productive jobs, firms must deal with higher tariffs and workers must contend with the growing use of robots, AI and digital platforms. More productive jobs would be created by reforms to enhance economic opportunity, human capacity and their virtuous interplay.