AI, firms and wages: Evidence from India

62 Pages Posted: 8 Nov 2021

Date Written: November 6, 2021

Abstract

We examine the impact of the deployment of artificial intelligence (AI) on hiring and wages in firms in the service sector using a novel dataset of 15 million vacancy posts from India's largest jobs website. We first document a rapid rise in demand for AI skills since 2016, particularly in the IT, finance and professional services industries. Vacancies demanding AI skills list substantially higher wages, but require more education and are highly concentrated in the largest firms and a small number of high-tech clusters. Exploiting plausibly exogenous variation in exposure to advances in the capabilities of AI, we then examine the impacts of establishment demand for AI skills, as a proxy for AI adoption. We find that growth in AI demand has a direct negative impact on the growth of non-AI and total job posts by incumbent firms, and reduces the growth of both average wage offers and wage offers for all but the lowest paid roles.

Keywords: artificial intelligence, labour markets, wages, development

JEL Classification: J23, O33

Suggested Citation

Stapleton, Katherine and Copestake, Alexander and Pople, Ashley, AI, firms and wages: Evidence from India (November 6, 2021). Available at SSRN: https://ssrn.com/abstract=3957858 or http://dx.doi.org/10.2139/ssrn.3957858

Katherine Stapleton (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Alexander Copestake

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
2028765387 (Phone)

HOME PAGE: http://copestake.info

No contact information is available for Ashley Pople

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