Artificial Intelligence Readiness and Employment: A Global Panel Analysis

Abstract

Artificial Intelligence (AI) is a major technological advancement, whose capabilities and rapid penetration into diverse sectors are reshaping jobs and raising fears about the displacement of human workers. The impact of AI on labour markets is mixed. It is anticipated that both creation and substitution effects will occur. The AI Readiness (AIR) Index, as proposed by Oxford University, captures the contribution of government, technology (including human capital), and infrastructure in preparing a country's economy for the challenges posed by AI. In this paper, we examine the impact of AI on the employment of highly educated workers. We test the impact of the AIR Index on employment using a global panel analysis on a sample of 78 countries and data covering the period 2019-2022. The results indicate that higher AI readiness scores are associated with a positive impact on the employment of highly educated workers. Insufficient AI literacy is an obstacle that could result in worker displacement. Policies enhancing AI literacy could assist human workers in adapting to the new intelligence, thereby facilitating their transition to an AI-driven environment.