ECB Research: AI’s Potential to Impact Salaries, Not Jobs, in Europe

ECB Research: AI's Potential to Impact Salaries, Not Jobs, in Europe

New research from the European Central Bank (ECB) suggests that while artificial intelligence (AI) integration has the potential to impact wages, it is unlikely to pose a threat to job security. Contrary to concerns about job displacement, the rapid adoption of AI is creating employment opportunities, especially for young and highly skilled individuals.

The study reveals that companies heavily investing in AI are facing a shortage of qualified workers, a deviation from typical labor market trends during economic downturns. Across 16 European countries, the employment share in sectors exposed to AI has increased, with low and medium-skill jobs remaining largely unaffected. In contrast, highly skilled positions have experienced the most significant growth, as outlined in the ECB’s Research Bulletin.

The findings may have implications for Africa, specifically Nigeria, as data for European occupations at the 3-digit level indicates increased employment shares in roles more exposed to AI, particularly those with a higher proportion of younger and skilled workers.

The research aligns with the Skill Biased Technological Change theory, suggesting that the impact of AI on employment varies across countries. While some show a decline in employment shares in occupations more exposed to AI-enabled automation, others experience growth. Country-specific factors, including the pace of technology diffusion, education levels, product market regulation (competition), and employment protection laws, contribute to this heterogeneity.

However, the study also notes “neutral to slightly negative impacts” on earnings, with the potential for these effects to escalate over time. The researchers caution that while the current findings provide insights, the full impact of AI-enabled technologies on employment, wages, growth, and equality is yet to be fully realized as these technologies continue to develop and gain wider adoption.


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