“An Empirical Study of AI Impact on Employment (2015-2025)”

Abstract

Artificial Intelligence (AI) is considered as 4^th wave of industrialisation with most transformative technologies of the 21st century. While AI improves productivity, efficiency, and decision-making, its rapid adoption has raised concerns not only regarding labour displacement & unemployment but also long-term economic imbalance. Historically, machines have displaced labour primarily in manufacturing activities; however, AI possesses the capability to automate not only repetitive tasks but also perform cognitive and analytical functions exclusive done by humans. Against this background, the present study empirically examines the impact of AI adoption on employment across countries during the period 2015–2025.

The study uses panel data for 20 countries over a ten-year period and applies a Fixed Effect Panel Regression Model to analyze the relationship between employment rate and major AI-related variables such as AI investment, automation rate, productivity index, reskilling investment, and AI readiness. The empirical findings reveal a mixed impact of AI on employment. AI investment and automation exhibit a statistically significant negative effect on employment, indicating short-term labour displacement caused by automation of routine and repetitive jobs. In contrast, productivity growth, reskilling investment, and AI readiness demonstrate significant positive effects on employment, suggesting the importance of human capital development and institutional preparedness in mitigating the adverse effects of AI on employment.

The study concludes that AI may destroy few jobs but also create new avenues of employment & thereby transform labour market. Therefore a prudent policy on AI infrastructure, reskilling & AI driven inclusive growth strategy needs to be implemented.