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Does artificial intelligence affect the pattern of skill demand? Evidence from Chinese manufacturing firms

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  • Xie, Mengmeng
  • Ding, Lin
  • Xia, Yan
  • Guo, Jianfeng
  • Pan, Jiaofeng
  • Wang, Huijuan

Abstract

In view of the recent penetration of artificial intelligence (AI) into production activities, we undertake a quasi-natural experiment to identify its impact on employment at different skill levels using micro-enterprise data from Chinese manufacturing during 2011–2017. Employing a robust difference-in-differences method with propensity score matching, we investigate the heterogeneous impact of AI adoption upon different skills across three dimensions — geographical regions, enterprise types, and the length of time since the adoption of AI. We find that AI reduces the relative demand for low-skilled labor across all regions in China, while increasing the relative demand for high-skilled labor only in the eastern region. These differential impacts of AI upon relative demand for different skills reflect firm-level technological intensity. Results also show that the longer the duration of AI use, the greater is the impact upon the relative demand for high-skilled labor.

Suggested Citation

  • Xie, Mengmeng & Ding, Lin & Xia, Yan & Guo, Jianfeng & Pan, Jiaofeng & Wang, Huijuan, 2021. "Does artificial intelligence affect the pattern of skill demand? Evidence from Chinese manufacturing firms," Economic Modelling, Elsevier, vol. 96(C), pages 295-309.
    • Handle: RePEc:eee:ecmode:v:96:y:2021:i:c:p:295-309
    DOI: 10.1016/j.econmod.2021.01.009
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