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Innovation and employment in the era of artificial intelligence

Author

Listed:
  • Marco Vivarelli

    (Università Cattolica del Sacro Cuore—Milano, Italy, and IZA, Germany)

  • Guillermo Arenas Díaz

    (Università Cattolica del Sacro Cuore)

Abstract

The relationship between technology and employment has always been a source of concern, at least since the first industrial revolution. However, while process innovation can be job-destroying (provided that its direct labor-saving effect is not compensated through market mechanisms), product innovation can imply the emergence of new firms, new sectors, and thus new jobs (provided that its welfare effect dominates the crowding out of old products). Nowadays, the topic is even more relevant because the world economy is undergoing a new technological revolution centred on automation and the diffusion of Artificial Intelligence (AI).

Suggested Citation

  • Marco Vivarelli & Guillermo Arenas Díaz, 2025. "Innovation and employment in the era of artificial intelligence," IZA World of Labor, Institute of Labor Economics (IZA), pages 154.2-154.2, March.
    • Handle: RePEc:iza:izawol:journl:2025:n:154.v2
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    More about this item

    Keywords

    innovation; technological change; R&D; artificial intelligence; employment; technological unemployment;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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