The (Short-Term) Effects of Large Language Models on Unemployment and Earnings
This addresses concerns about job displacement from AI for workers and policymakers, but it is incremental as it focuses on short-term effects and specific outcomes.
The paper examined the short-term labor market effects of large language model (LLM) adoption by comparing earnings and unemployment across occupations with varying exposure levels, finding that workers in highly exposed occupations experienced earnings increases after ChatGPT's introduction, while unemployment rates remained unchanged.
Large Language Models have spread rapidly since the release of ChatGPT in late 2022, accompanied by claims of major productivity gains but also concerns about job displacement. This paper examines the short-run labor market effects of LLM adoption by comparing earnings and unemployment across occupations with differing levels of exposure to these technologies. Using a Synthetic Difference in Differences approach, we estimate the impact of LLM exposure on earnings and unemployment. Our findings show that workers in highly exposed occupations experienced earnings increases following ChatGPT's introduction, while unemployment rates remained unchanged. These results suggest that initial labor market adjustments to LLMs operate primarily through earnings rather than worker reallocation.