Labor Space: A Unifying Representation of the Labor Market via Large Language Models
This provides policymakers and business leaders with a unifying framework for labor market analysis and simulation, though it is incremental as it applies existing methods to a new domain.
The paper tackles the problem of analyzing the labor market's diverse entities in isolation by introducing Labor Space, a vector-space embedding derived from a large language model, which enables integrative analysis and estimation of economic shock effects, demonstrating capabilities like positioning entities on economic axes.
The labor market is a complex ecosystem comprising diverse, interconnected entities, such as industries, occupations, skills, and firms. Due to the lack of a systematic method to map these heterogeneous entities together, each entity has been analyzed in isolation or only through pairwise relationships, inhibiting comprehensive understanding of the whole ecosystem. Here, we introduce $\textit{Labor Space}$, a vector-space embedding of heterogeneous labor market entities, derived through applying a large language model with fine-tuning. Labor Space exposes the complex relational fabric of various labor market constituents, facilitating coherent integrative analysis of industries, occupations, skills, and firms, while retaining type-specific clustering. We demonstrate its unprecedented analytical capacities, including positioning heterogeneous entities on an economic axes, such as `Manufacturing--Healthcare'. Furthermore, by allowing vector arithmetic of these entities, Labor Space enables the exploration of complex inter-unit relations, and subsequently the estimation of the ramifications of economic shocks on individual units and their ripple effect across the labor market. We posit that Labor Space provides policymakers and business leaders with a comprehensive unifying framework for labor market analysis and simulation, fostering more nuanced and effective strategic decision-making.