Generative AI: degenerative for jobs?

Edward Egan

Headlines warn of a looming ‘jobpocalypse’, but the reality is more complex. Rather than simply causing a wave of job losses, the economic literature suggests generative AI could influence the labour market through several – potentially offsetting – channels: productivity gains, job displacement, new job creation, and compositional shifts. The balance between these effects, rather than displacement alone, will shape AI’s aggregate impact on employment. The latest research suggests that overall effects remain limited so far, but there are some early signs of AI’s impact. I find that, since mid-2022, new online vacancies in the most AI-exposed roles have decreased by more than twice as much as the least exposed group. This highlights the need for ongoing monitoring as AI adoption accelerates.

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What can 40 years of data on vacancy advertising costs tell us about labour market equilibrium?

Michal Stelmach, James Kensett and Philip Schnattinger

Economists frequently use the vacancies to unemployment (V/U) ratio to measure labour market tightness. Analysis of the labour market during the current inflationary period often assumes the V/U ratio is constant and compares this measure with a supposed pre-2019 equilibrium. However, the V/U ratio has trended upwards over recent decades. We explore the impact of changing vacancy posting costs on equilibrium labour market tightness through the lens of two models: an empirical error-correction model; and a simple structural ‘search and matching’ model. We find that the raw V/U ratio can be misleading for conclusions about labour market tightness. We outline an improved measure – the VU gap – which indicates that the UK labour market returned to a broadly balanced position in 2024 H2.

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Covid-19 briefing: heterogeneous impacts of the pandemic

Andrea Šiško

The COVID-19 pandemic has rapidly spawned a literature analysing its impact on macroeconomic aggregates. But there’s also been work that seeks to look at heterogeneity of impacts across industries, households and individuals. This post summarises this literature which seeks to better understand the heterogeneous effects of the pandemic and associated policy responses on income, hours worked and employment status.

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