s10644-024-09629-6

Economic Change and Restructuring (2024) 57:34
https://doi.org/10.1007/s10644-024-09629-6
Future jobs: analyzing the impact of artificial intelligence

on employment and its mechanisms
Yang Shen1
Received: 30 August 2023 / Accepted: 17 January 2024 / Published online: 15 February 2024
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature
2024
Abstract
Technological innovation has promoted the development of human flourishing.
Based on panel data for 30 provinces in China from 2006 to 2022, this study exam-
ines the impact of artificial intelligence (AI) on manufacturing employment in
China using the two-way fixed-effect model and the instrumental variable method.
The study finds that contrary to the traditional impression of “machines replacing
humans,” AI technology is correlated with increasing the total number of jobs on
the market. Thanks to more efficient labor productivity, capital deepening, and spe-
cialized division of labor from integrating digital technology, AI offsets the nega-
tive effect of robots on employment and significantly increases manufacturing
enterprises’ market size and production scale, with a significant job creation effect.
Heterogeneity is evident in the positive impact of AI on employment, which has
increased the number of jobs in labor-intensive industries and for female workers.
Regions with more complete digital infrastructure construction exhibit stronger
job creation effects. Mechanism research reveals that the geographical agglomera-
tion mode of traditional industries are undergoing evolutionary transitions under the
transformation of digital technology, and modern industrial agglomeration repre-
sented by virtual agglomeration is an indispensable mediating mechanism for AI to
create jobs. The study’s conclusions can alleviate citizen’s concerns regarding AI
crowding-out jobs, encouraging workers and policymakers to make full use of AI
technology to improve employment in the digital economy era.
Keywords Industrial robot · Labor market · Virtual agglomeration · Technological

unemployment · Machines replacing humans · Creative effect
* Yang Shen
yangs996@foxmail.com
1
Institute of Quantitative Economics, Huaqiao University, No.668 Jimei Avenue,
Jimei District, Xiamen City 361021, Fujian Province, China
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34 Page 2 of 33 Economic Change and Restructuring (2024) 57:34
1 Introduction
The most basic purpose of a country’s economic development is to ensure

employment. Only by increasing the number of jobs and ensuring employment
stability can residents enjoy the dividends of economic and social development.
Diversification, technological upgrading, and innovation have contributed to
achieving the United Nations 2030 Sustainable Development Goals (SDGs) of
full and productive employment and decent work for all (SDG 8) (Pianta 2018;
Kim 2023). Since the workshop handicraft industry was transformed into a large-
scale machine-supported industry in the eighteenth century, the application of
machines in industrial production is an inevitable trend of economic and social
development. Human society has experienced four rounds of technological rev-
olution, with each technological change deepening automation technology. The
conflict and rebalancing between efficiency and employment are a continuously
repeating process of replacing people with machines (Liu 2018; Morgan 2019).
When people achieve the new wave of human economic and social development
associated with advanced technological innovation, they also accept the inherent
“creative destruction” from the iterative renewal from new technologies (Michau
2013; Josifidis and Supic 2018; Forsythe et al. 2022). The advantages of robots
in cost and efficiency relative to manual labor are increasingly prominent, and
the dividends of new technology continue to promote enterprises’ investment in
intelligent equipment, replacing labor and reducing the market demand for labor
(Wang et al. 2023). In contrast to previous mechanized and automated machine
replacement, artificial intelligence (AI) machine replacement is not just mani-
fested in replacing workers’ physical strength but replacing workers’ brain power
by AI systems, which may crowd out human workers in the machine production
process. Where will technology lead humanity? To what extent will AI change
the relationship between humans and work? Will advanced productivity lead to
large-scale structural unemployment? These questions have been hotly debated.
China has entered a new stage of deep integration and development of new
technology clusters represented by the internet and the real economy in which
physical space, cyberspace, and biological space are fully integrated and new
industries, new models, and new forms of business continuously emerge. In the
course of the vigorous development of digital technology, its characteristics
in terms of employment are more prominent, such as strong absorption capac-
ity, flexible form, and diversified job demands, and many new occupations have
emerged (Ma et al. 2022). The new practice of digital survival, which is repre-
sented by platform, sharing, full-time, and gig economies, while adapting to,
leading, and innovating the transformation and development of the economy has
caused significant changes in employment carriers, forms of employment, and
occupational skill requirements (Dunn 2020; Wong et al. 2020; Li et al. 2022).
AI is a technology based on computer science with the purpose of enabling
computer systems to perceive, think, learn, and make decisions in a human man-
ner. With the release of ChatGPT, a wave in the universal popularity of AI has
arrived. In the contemporary state of rapid technological progress, AI technology
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Economic Change and Restructuring (2024) 57:34 Page 3 of 33 34
has approached or even surpassed human beings in many fields, such as image
and sound recognition technology, big data processing technology and other
forms. The new round of scientific and technological evolution represented by
AI is expected to bring new opportunities and challenges to the existing labor
market, and many traditional industries will significantly change (Ma et al. 2022).
As with the advent of mobile assembly lines in the early 1900s and the main-
frame computer in the 1960s, people fear that new technologies would replace
jobs (Bárány and Siegel 2020).
Although the rapid iteration and cross-border integration of general informa-
tion technology in the era of the digital economy has made a significant con-
tribution to stabilizing employment and promoting growth, this is only attribut-
able to the employment diffusion effect caused by the continuous application and
development of the times and technological progress in the field of social pro-
duction (Su et al. 2022). Digital technology will inevitably replace some tasks
that are performed by human labor as deep learning and AI give machines and
operating systems the ability to perform more complex tasks, and the employ-
ment prospects of enterprise employees face new challenges. According to the
Future of Jobs 2020 report released by the World Economic Forum, the reces-
sion caused by the COVID-19 pandemic and the rapid development of automa-
tion technology are changing the job market much faster than expected, and the
new division of labor between humans and machines will disrupt 85 million jobs
in 15 industries worldwide over the next 5 years. Demand for skilled jobs such as
data entry, accounting, and administrative services has been affected. Previous
research shows that agriculture, forestry, animal husbandry, fishery, mining, man-
ufacturing, and construction industries, which require a high level of intelligence
are at high risk of occupational substitution, and older and less educated workers
have a very high risk of substitution (Wang et al. 2022a). According to LinkedIn’s
Future of Jobs 2023 Report: The Impact of AI on Work, 47% of executives in the
USA believe that using AI technology improves productivity and 92% believe that
human interaction skills are more crucial than ever. This indicates that jobs do
not necessarily disappear, but are continuously changing as technology evolves,
as do the skills required to perform them. Whether AI, big data, intelligent manu-
facturing technology, and new digital productivity will significantly change the
organic composition of capital and harm labor employment has not yet reached a
consistent conclusion. Due to the considerable number of manufacturing employ-
ees in China, the challenge of machine substitution to the labor market is more
severe than that in other countries, and the use of AI represented by manufactur-
ing robots is expected to have a substantial impact on China’s labor market (Xie
et al. 2022). The primary purpose of industrial enterprises’ digital transformation
is to improve quality and efficiency, but the relationship between machines and
workers has been distorted in the actual application of digital technology. The
question of whether rapidly changing technologies will replace human labor must
continue to be investigated. Industrial companies introduce robots as an entry
point, and the study examines the impact of AI on the labor market. Taking tech-
nology as a measure to determine the impact of this new round of technological
evolution on the labor market and analyzing the general impact of technologies’
13
effect on employment it is essential for discerning the livelihood issues of digital

technology and advancing full employment in the digital economy era. The study
objectives endeavor to answer the following questions:
1. Will the impact of AI on employment be negative or positive?

2. If AI increases employment opportunities, what are the heterogeneous effects
between gender, regional digital infrastructure development levels, and indus-
tries?
3. What is the theoretical mechanism of AI for increasing employment? In par-
ticular, with the drastic changes in traditional industrial agglomeration, will the
virtual industrial agglomeration spawned by the digital economy positively affect
employment?
The remainder of the paper is organized as follows. In Sect. 2, we summarize

the literature on the impact of AI on the labor market and employment and clas-
sify it from three perspectives: pessimistic, negative, and neutral. In Sect. 3, we
provide a theoretical analysis of AI’s promotion of employment and present the
research hypotheses to be tested. In Sect. 4, we describe the data source, variable
setting and econometric model. In Sect. 5, we test Hypothesis 1 and conduct a
robustness test and the causal identification of the conclusion. In Sect. 6, we test
Hypothesis 2 and Hypothesis 3, as well as testing the heterogeneity of the base-
line regression results. Finally, Sect. 7 conclusions and policy discussion. The
research framework for this study is shown in Fig. 1.
Fig. 1 Research framework
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2 Literature review
2.1 Create or destroy? The contradictory of AI on employment
The social effect of technological progress has unique temporal characteristics in

stages, and various understanding of its development vein and internal mecha-
nisms also have deviations. A classic argument of labor sociology and labor eco-
nomics is that technological upgrading objectively causes workers to lose their
jobs, but historical experience since the Industrial Revolution indicates that it
does not cause large-scale structural unemployment (Mao and Yang 2023). While
neoclassical liberals such as Adam Smith argued that technological progress
would not cause unemployment, Sismondi was adamant that it would, David
Ricardo endorsed Luddite fear in his book On Machinery, and Marx argued that
technological progress could increase labor productivity but also excluded labor
participation, leaving workers in poverty (Vivarelli 2016). When the previously
necessary labor of the workers is no longer necessary for the supply of surplus
labor, it becomes directly surplus labor, a surplus population. The impact of AI
on employment differs from previous industrial revolutions as machines are no
longer straightforward mechanical tools but assume a worker role just like peo-
ple can learn and think (Boyd and Holton 2018). If the application of technol-
ogy is only for capital proliferation, the substitution and crowding-out effects
of the labor market are unstoppable and may even cause the immediate unem-
ployment of a large number of laborers. However, technology applications aim
to save labor and liberate human freedom. The labor substitution generated by
technological progress conforms to trends of the contemporary world, in which
social evolution is presented as a natural, historical process (Sun 2023). To avoid
being eliminated, workers must continuously improve the value of their labor and
strive to match humans and machines with intelligent production standards. On
the surface, people are operating and controlling machines, but in reality, it is the
machines that control people and enslave them, alienating humans from the intel-
ligent machines. Summarizing previous research, we identify three main argu-
ments about the relationship between AI and employment.
First, AI has the effect of creating and filling jobs. The intelligent manufac-
turing industry paradigm characterized by AI technology will help high-quality
human–machine cooperative occupational mode. In an enlightened society,
the social state of shared prosperity benefits the lowest classes precisely due to
advanced production capabilities and higher labor efficiency established by refin-
ing the division of labor. Improving production efficiency and reducing the price
of final products stimulates social consumption, and technological progress has
price and income effects, which subsequently drive related enterprises to expand
production scales and increases the labor force demand (Li et al. 2021; Ndubuisi
et al. 2021; Yang 2022; Sharma and Mishra 2023; Lu et al. 2023). A habitual con-
sensus regards robots as human competitors; however, this is only a materialistic
view of traditional machinery. Humans and machines are not a zero-sum game.
When tasks evolve from cooperation for all to cooperation between humans and
13
machines, fewer production constraints arise, which maximizes total factor pro-
ductivity (TFP), which creates more jobs and collaborative tasks (Balsmeier and
Woerter 2019; Duan et al. 2023). AI technology can also improve TFP efficiency
suitable to factor endowment structure and improve the production efficiency
between upstream and downstream enterprises in industrial and value chains. The
increased efficiency of the entire market will expand enterprises’ production scale
and promote the synchronous growth of the demand for various skilled labor,
with a job creating effect (Liu et al. 2022). Therefore, with the rapid accumu-
lation of big data resources, continuous improvement of cloud computing capa-
bilities, and ongoing evolution of deep learning algorithms, AI will significantly
expand the relevant scenarios of AI technology application, advancing its wide
use in the production field, establishing new occupations and new industries and
creating more jobs. The International Labour Organization (ILO) (2023) asserted
that generative AI may enhance employment by automating certain jobs, rather
than replacing them.
Second, AI can also have destructive and substitution effects on employment. While
AI can improve enterprises’ production efficiency and people’s convenience, it also
raises concerns regarding employment substitution risks. Saving previously necessary
labor time extends free labor time, and the core of the automation wave triggered by
previous industrial revolutions is that the application of machines improved material pro-
ductivity and saved a large amount of human labor. The rapid development of AI tech-
nology has reduced many repetitive and stylized jobs, changed the structure of the labor
force, and had a significant impact on the quantity and ability of the labor force. With
the deep integration of information and communications technology, the internet, big
data, and AI, everything in human society and nature can be reduced to algorithms, and
the future development of AI technology will gradually replace human natural endow-
ments and dominate human activities on a large scale (Yang 2022). Technologically
enabled productivity development establishes more free time, particularly in health care,
transportation, and production environment control industries, which have significantly
benefited; however, in recent years, some industrialized countries have been facing the
dilemma of declining labor income share and slow growth in total labor productivity
when applying AI on a large scale (Autor 2019). AI technology is being popularized in
manufacturing enterprises’ production and operations, and intelligent technology (rep-
resented by industrial robots) has penetrated manufacturing enterprises’ product design,
production and manufacturing, warehousing and logistics, and other links, indirectly or
directly replacing human labor. Some literature has asserted that the widespread use of
intelligent equipment has improved manufacturing enterprises’ labor productivity, and
the use of intelligent equipment in the production process of enterprises will reduce the
number of employees needed for production as an indirect substitute for traditional labor
(Cao et al. 2023). The increased integration of intelligent equipment in the manufactur-
ing industry means that the work originally completed by human labor is completed by
robots, resulting in the phenomenon of machine replacement. The best way to protect
oneself from losing a job to AI is to secure employment that requires face-to-face interac-
tion, even if it rarely happens. Notably, with the rapid and in-depth development of digi-
tal technologies, some complex, cognitive, and creative jobs that were once considered
13
irreplaceable in the traditional view will also be replaced by AI; thus, automation tech-
nology is not only a substitute for low-skilled labor (Zhao and Zhao 2017; Dixon et al.
2021; Novella et al. 2023; Nikitas et al. 2021). Among the contemporary emerging tech-
nologies, AI and robotics have a particularly significant impact on the manufacturing job
market, and industry-related jobs will experience severe unemployment due to its disrup-
tive effect (Zhou and Chen 2022; Sun and Liu 2023). The power of AI models grows
exponentially rather than linearly, and the rapid development and diffusion of technology
is expected to have a devastating effect on knowledge workers, similar to the effect of
the Industrial Revolution (Liu and Peng 2023). In particular, developing and improving
AI-generated content will pose a more significant threat to more highly skilled work-
ers such as researchers, data analysts, and product managers. Workers engaged in crea-
tive intelligence-oriented occupations now face unprecedented anxiety and unease (Nam
2019; Fossen and Sorgner 2022; Xue et al. 2022; ILO 2023). While creating jobs, digital
technology will undoubtedly replace low-skilled workers, which could lead to serious
employment polarization and structural unemployment (Zhang et al. 2022).
Third, clearly, the effect of AI on employment is uncertain and its impact on
human work is not a simple utopian or dystopian scene, but a combination of utopia
and dystopia (Lu 2020; Bughin 2023). Adopting effective AI operations can correct
the misallocation of resources by the market, enterprises, and individuals to labor-
intensive tasks, reverse the non-directional allocation of robots in the labor sector,
and promote reallocation between manufacturing and service industries. The impact
on the scale of employment across society is uncertain (Fabo et al. 2017; Huang and
Rust 2018; Berkers et al. 2020; Tschang and Almirall 2021; Reljic et al. 2021). For
example, Oschinski and Wyonch (2017) argued that jobs in Canada that are eas-
ily replaced by AI technology only account for 1.7% of the total labor market, and
evidence that automation technology will cause mass unemployment in the short
term is lacking. Wang et al. (2022c) asserted that industrial robots primarily have a
negative short-term impact on labor demand; however, in the long run, robots will
predominantly generate new employment opportunities. Kirov and Malamin (2022)
contended that the pessimism that AI will destroy the jobs and quality of language
workers on a large scale is unjustified. Although some jobs will be eliminated as
technology evolves, many more will be created in the long run.
2.2 Literature gaps and research contributions
The research regarding whether AI technology squeezes jobs is voluminous,

but the conclusions remain inconsistent (Boyd and Holton 2018; Gu et al. 2022;
Zurdo et al. 2022). Particularly in the context of the accelerated development
of the digital economy, new occupations, models, and economic formats are
emerging in an continuously evolving stream, and enterprises’ and employees’
forms of employment are undergoing progressive changes. In this fourth wave
of the scientific and technological revolution, technological unemployment has
ascended to the theoretical plateau again, and the impact of technological pro-
gress on employment has received unprecedented attention. The contemporary
13
economy is undergoing real, forced, and fundamental changes, which are so rapid
that the human race is generally aware of the circumstances and anticipates their
development. However, whether the morphological innovation of the fixed capital
materialized in machine equipment and AI technology will inevitably cause tech-
nological unemployment has not yet been deeply investigated (Yu 2023). Some
research has argued that technical unemployment is concentrated in a substitution
of human labor (Chen et al. 2022). Under the premise of the rapid development of
AI technology applications, labor savings exceed the rate of identifying new uses
for labor, resulting in increased unemployment. Machine intelligence enhances
work efficiency, lowers operating costs and strengthens production stability, alle-
viating enterprises’ recruitment difficulties and reducing employee numbers with
substitution effects (Javed 2023). Previous studies have also argued that AI inno-
vation will not lower employment but will redirect workers from existing jobs to
new production sectors. The ultimate goal of technological innovation is not to
eliminate jobs but to contribute to creating more new businesses and generating
more highly skilled jobs (He 2018; Damioli et al. 2023). This study focuses on
the influence of AI on employment in the manufacturing industry, examining the
job creation effect of technological progress from perspectives of capital deep-
ening, labor refinement, and labor productivity, and systematically exploring the
heterogeneous impact of robots on employment demand, structure, and different
industries. The potential contributions of the study are threefold.
1. This study focuses on enterprises’ strategic decisions to install and introduce

industrial robots as a proxy for AI, analyzing the impact of AI technology on
manufacturing employment using 17 years of data from China. The research con-
clusions indicate that AI is not simply replacing low-skilled labor but advancing
professional differentiation and expanding the reproduction scale by increasing
labor productivity and the subsequent demand for labor employment.
2. This study reveals the mechanism of the new industrial agglomeration model
in the digital economy era. The internet platform spawned by digital technol-
ogy makes employment no longer confined to a specific gathering area, and the
traditional geographic industrial agglomeration gradually is evolving into virtual
agglomeration (VA); thus, the positive externalities of digital industrial clus-
ters and network VAs are geometrically magnified. Individual practitioners and
entrepreneurs can obtain orders, receive training, connect resources, and fulfill
employment needs more widely and efficiently in the network state, and achieve
higher quality independent employment. The virtual technology from network
platforms established by AI and the internet represents social and economic phe-
nomena that must be recognized.
3. The study determines that female workers and workers in labor-intensive indus-
tries have enjoyed the highest dividends from the digital economy. Analyzing the
impact of AI on employment from industry and gender perspectives enriches the
analysis of this study.
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3 Theoretical mechanism and research hypotheses
3.1 The direct influence of AI on employment
With advances in AI, machine learning, big data, and other technologies, a new gen-
eration of intelligent robots can perform routine, repetitive, and regular production
tasks that previously required human judgment, problem-solving, and analytical
skills (Jarrahi 2018). According to the combined task framework, the most signifi-
cant advantage of the productivity effect of intelligent technology is to create new
demands, that is, to create new tasks (Acemoglu and Restrepo 2018). New task
packages update existing tasks and create new task combinations with more com-
plex technical difficulties. Although intelligent technology is widely used in vari-
ous industries, it may have an employment substitution effect resulting in technical
unemployment; however, the high efficiency associated with ongoing technological
innovation can also facilitate the development and growth of a series of emerging
industries, exerting job creation effects. Technological progress creates new jobs
that are more aligned with the needs of social development, increasing labor force
demand (Borland and Coelli 2017). Therefore, enterprises’ intelligent development
will replace the initially programmed tasks and produce more complex new tasks,
and human workers in non-programmed positions, such as technology and knowl-
edge, will have more comparative advantages.
Generally speaking, this study argues that the new technology–economy para-
digm derived from automation and AI technology has affected the breadth and depth
of employment, which is manifested in four distinct ways.
1. Integrating AI into enterprises’ production processes reduces the demand for

coded jobs in enterprises while increasing the demand for non-programmed com-
plex labor, replacing unskilled talent engaged in tasks such as handling, welding,
and sorting and increasing the demand for skilled labor for programming, intel-
ligent operation, and data analysis. New occupations with large market demand
such as AI trainers, intelligent manufacturing engineering technicians, intelligent
robot developers, and AI operation and maintenance engineers establish new
employment opportunities for workers. For example, under the impact of AI,
traditional factories are transforming toward intelligent factories, generating new
professions in enterprises such as digital managers, Internet of Things (IoT) instal-
lation, debugging personnel, industrial robot system operators, and operation and
maintenance personnel, which demand highly skilled talent.
2. Digital technology development has deepened and refined the division of labor,
accelerated the manufacturing industry’s service trend, increased the modern
service industry’s employment share, and created multiple emerging jobs. Enter-
prises use machine replacement to engage in routine tasks, improving enter-
prises’ automation-level, production costs, and product prices. Product demand
and increased corporate profits further stimulate enterprises to expand reproduc-
tion. With the continuous expansion of enterprises’ market size, (non-automated)
departments within enterprises that are not easily replaced by AI will recruit more
13
labor, driving enterprises to increase the derivative demand for labor. Further-
more, enterprises can more efficiently leverage the advantages of economies of
scale and scope, lower the minimum production scale, expand business forms,
and provide a wider higher variety of products, increasing new labor demand and
employment.
3. Advanced production processes give workers higher autonomy and efficiency in
their work, improving job satisfaction and employment quality. As described in
Das Kapital, “Although machines actually crowd out and potentially replace a
large number of workers, with the development of machines themselves (which
is manifested by the increase in the number of the same kind of factories or the
expansion of the scale of existing factories), the number of factory workers may
eventually be more than the number of handicraft workers in the workshops or
handicrafts that they crowd out. It can be seen that the relative reduction and
absolute increase of employed workers go hand in hand” (Duménil and Lévy
2003; Li and Zhang 2022). The Open AI team estimated that by using a large lan-
guage model, about 15% of tasks in the US could be done faster at the same level
of quality, which rises to 47%–56% when considering software and technology
tools (Eloundou et al. 2023). In the future, AI will be capable of assisting labor
to improve production efficiency.
4. Internet information technology reduces the spatiotemporal distance between
countries, promotes the transnational flow of production factors, and deepens
the international division of labor. The changes from AI technology will foment
the decline of countries’ traditional industries. In new national divisions of labor
system changes, these industries may emerge in late-developing countries and
increase employment through international labor export.
From a long-term perspective, this study argues that AI will create more jobs
by continuously expanding social production scale, improving production effi-
ciency, and facilitating the development of more detailed industrial categories.
With the accumulation of human capital under the internet wave, workers are
gradually liberated from heavy and dangerous work, and skills and job adaptabil-
ity are consistently improved. The employment creation and compensation effects
of technological and industrial progress have been found to be more significant
than the substitution effects (Han et al. 2022). Accordingly, this study proposes
the following research hypotheses:
Hypotheses 1 (H1) AI will increase employment.
Hypotheses 2 (H2) AI promotes employment by improving labor productivity, deep-

ening capital, and refining the division of labor.
3.2 Mechanism of virtual agglomeration
In the digital economy, the rise of network virtual space has dramatically
expanded the concept and connotation of space, cultivating VA with real-time
13
exchange of data and information as the core. This transcends Marshall’s theory
of economies of scale, which is no longer limited to geographical agglomera-
tion in the sense of natural territory but is more complex and multidimensional
(virtual clusters, high-tech industrial clusters, and virtual business circles)
(Moretti 2021). Digital economy progress can rapidly improve the externality
of the agglomeration economy, promote the reform of traditional geographic
agglomeration, and mitigate the need for excessive agglomeration of physical
space. Under the influence of a new digital technologies the intelligent and plat-
form transformation trends of some industries and enterprises is prominent, and
industrial digitalization and digital industrialization promote overall industrial
upgrading. Information technology innovation will lead to “distance death”
(Schultz 1998). With enterprises’ advances in digital and networked services,
the processes of trading digital knowledge and services (i.e., professional knowl-
edge, information combination, cultural products, and consulting services) has
transitioned from offline to digital trade, and the original geographical space
between enterprises has become a virtual network, with real-time data and infor-
mation exchange at its core (Wang et al. 2018). VA magnifies the social impact
of industrial and geometrical agglomeration effects, and enterprises in the same
industry and affiliated upstream and downstream enterprises can execute low-
cost, long-distance transactions, services, and collaborative production using
digital trade, resulting in large-scale, zero-distance agglomeration and neigh-
borhood-style production, service, circulation, and consumption (Tan and Xia
2022). Three potential mechanisms are examined in this study.
1. Digital knowledge spillover. Enterprises’ knowledge and information in pro-

duction, design, research and development (R&D), organization, and trade are
increasingly aided using digital technology. The tacit knowledge that used to
require face-to-face communication has now become codable, transmissible, and
reproducible using digital technology. Tacit knowledge has gradually become
explicit, with more pronounced knowledge spillover and technology diffusion,
which leads to increased demand for unconventional task labor (Zhang and Li
2022).
2. Shared labor market. Cloud platforms have transitioned the traditional geo-
graphical agglomeration labor pool effect to VA, and employment is no longer
limited to internal organizations and a particular regional scope. Digital tech-
nology allows enterprises to hire “ghost workers” with lower wages to make
up for the possibility of AI’s last mile. Information technology and network
platforms facilitate broad connections from all social nodes, promoting labor’s
work time and space and breaking away from the standard fixed spatiotempo-
ral framework. It is also more convenient for workers to engage in or depart
from work tasks, indirectly increasing the temporary and transitional nature of
work, which establishes a decentralized organizational management model of
supplementary cooperation, social networking, industry experts, and skilled
labor (Wen and Liu 2021). With a mobile phone and a computer, laborers
13
across the globe can create value for enterprises or customers, and forms of
labor are more flexible and diverse. Workers can provide real-time digital
services to geographically dispersed employers, and they can also obtain flex-
ible employment information and improve their digital skills through digital
resources, resulting in an odd-job, crowdsourcing, and sharing economies and
other new economic forms.
3. Breaking through the limitations of time and space. The network virtual space
can simultaneously accommodate an unlimited number of enterprises. In the
commercial background of digital trade, while any enterprise can obtain any
intermediate supply in the online market, its final product output can instantly
become other enterprises’ intermediate input, opening raw material supply and
product sales to the whole market. The market scale effect of intermediate inputs
can be infinitely amplified and is no longer confined to the space limitations of
geographical agglomeration (Duan and Zhang 2023). Therefore, VA can pro-
mote the compression of physical time and space, reduce or even offset iceberg
transportation costs, breaking geographical distance barriers and weakening the
dependence of economic activities on geographical space.
For a heterogeneous labor force, the change in production and living in regions
within and between cities, the location choice of employment and different work-
ers’ residence will also change based on the principle of self-utility maximization.
The working mode of the highly skilled labor force can shift to a more flexible VA
through the combination of telecommuting, home working, and traditional office
work, which will reduce unnecessary commuting costs. Online work can also free
up more resources and space for the geographical agglomeration of the ordinary
labor force determined by the nature of work and promote the location choice of
the heterogeneous labor force from the traditional work–residence proximity to a
broader work–residence separation spatial model. Accordingly, this study proposes
the following research hypotheses:
Hypotheses 2 (H2) AI will promote employment by improving enterprises’ virtual

agglomeration.
4 Materials and methods
4.1 Variable setting
4.1.1 Explained variable
Employment scale (ES). Compared with agriculture and service industries, the
industrial sector accommodates more labor, and robot technology is also mainly
used in the industrial sector, which has the greatest demand shocks effect on man-
ufacturing jobs. This study uses the number of employees in manufacturing cities
and towns as the proxy for ES.
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4.1.2 Core explanatory variable
AI: Emerging technologies endow industrial robots with more sophisticated techni-
cal attributes, making them assume the role of human beings in many work pro-
jects that can operate independently or assist workers to complete production tasks.
Industrial robots are an important representation of AI technology materialized in
machinery and equipment. In this study, the installation density of industrial robots
is the proxy variable for AI. Robot data are the number of robots installed in vari-
ous industries at various national levels published by the International Federation of
Robotics (IFR). Because the dataset published by IFR is presented at the national-
industry level, and IFR industry classification standards are differ significantly from
those in China, this study first references Yan et al. (2020) by matching the 14 manu-
facturing categories published by IFR with the subsectors in China’s manufacturing
sector, and then uses the mobile share method to merge with the employment num-
bers of various industries in various provinces. We first match the national subsec-
tor data provided by the IFR with China’s second National Economic Census data,
then we use the share of employment in different industries in all employment in a
province to construct weights and determine the industry-level robot data at the local
provincial–industry level. Finally, we summarize the application of robots in various
industries at the provincial level. The Bartik shift-share instrumental variable (IV)
is widely used to measure robot installation density at the city (province) level (Wu
2023; Shen and Zhang 2023; Shen and Yang 2023; Yang and Shen 2023; Liu et al.
2024). The calculation process is as follows:
N
∑ employij,t=2006 Robotjt
Robotit = × (1)
j=1
employi,t=2006 employj,t=2006
where N is a collection of industries involved in manufacturing, Robotit is the robot

installation density of province i in year t, employij,t=2006 is the number of employees
in industry j of province i in 2006, employi,t=2006 is the total number of employees
in province i in 2006, and Robotjt ∕employi,t=2006 is the robot installation density and
industry level in 2006.
4.1.3 Mediating variables
Labor productivity (LP). According to the definition and measurement method pro-
posed by Marx’s labor theory of value, LP is measured by the balance of the total
social product minus intermediate goods and the labor force consumed by the pure
production sector (Cruz 2023). The specific calculation process is AL = Y − k∕l ,
where Y represents GDP, l represents employment, k represents capital deprecia-
tion, and AL represents LP. This study uses industrial enterprises’ per capita fixed
capital stock above a designated size as a proxy variable for capital deepening (CD).
The division of labor refinement (DLR) is measured by the number of employees
in producer services. VA is primarily a continuation of the location entropy method
in the traditional measurement of industrial agglomeration, and we assign weight
according to the number of internet access ports in the country. Because of the
13
dependence of VA on digital technology and network information platforms, we

first calculate the degree of industrial agglomeration in each region using the num-
ber of information transmission, computer service, and software practitioners and
then multiply this
) figure with
) (the internet ) port weight. The specific expression is
Aggit = Mit ∕Mt ∕ Eit ∕Et × Netit ∕Nett , where Mit represents the number of
( (
information transmission, computer service, and software practitioners in region i
in year t, Mt represents the total number of national employment in this industry,
Eit represents the total number of employment in region i, Et represents the total
number of national employment, Netit represents the number of internet broadband
access ports in region i, and Nett represents the total number of internet broadband
access ports in the country. VA represents the degree of virtual agglomeration.
4.1.4 Control variables
To avoid endogeneity problems caused by missing essential variables and obtain

more accurate estimation results, we also introduce seven control variables. We
measure road accessibility by the actual road area at the end of the year and indus-
trial structure (IS) by the proportion of tertiary and secondary industries’ added
value, which is the full-time equivalent of R&D personnel measures R&D invest-
ment (RD). We measure wage cost using city average salary as a proxy variable;
marketization (MK) using the Fan Gang marketization index as a proxy variable;
urbanization (UR) by the proportion of the urban population to the total population
at the end of the year; and the proportion of general budget expenditure to GDP
measures macro-control.
4.2 Econometric model
Fixed-effect (FE) models are often used to analyze panel or longitudinal data to elim-
inate the difference between individuals through the influence of inherent individual
characteristics on variable relationships and estimate the relationship between variables
more accurately. The general statistical practice is to generate a series of dummy vari-
ables to build a sizable variable matrix for regression. We use the following individual
FE models with dummy variables:
N
∑
Yit = Xit� 𝛽 + Zi� 𝛿 + 𝛼i Di + 𝜀it (2)
i=1
where the dummy variable is defined as Di = 1 for individual i, or 0 for another

individual. FE is incorporated into the model as a control variable to ensure accu-
rate estimation of the relationships between the variables. 𝛼i is an individually unob-
servable variable with time invariant characteristics, Zi is an individually observ-
able variable with time invariant characteristics, and Xit is a time-varying individual
13
variable. Identifying the time mean of both sides of Eq. (2) and eliminating it by the
intra-group deviation transformation, we can obtain the following:
( )� ( )�
(3)
( ) ( )
Yit − Y i = Xit − X i 𝛽 + Zi − Z i 𝛽 + 𝛼i − 𝛼 i + 𝜀it − 𝜀i
( )�
(4)
( )
Yit − Y i = Xit − X i 𝛽 + 𝜀it − 𝜀i
( )
where Yit − Y i , Xit − X i , and 𝜀it − 𝜀i are the internal difference, representing the
value after removing the individual mean. Similarly, adding a time FE to the equa-
tion addresses the problem of missing variables that do not vary with individuals but
vary with time, which can be obtained on the basis of Eq. (2) as follows:
N
∑
Yit = Xit� 𝛽 + Zi� 𝛿 + 𝛼i Di + 𝛾t + 𝜀it (5)
i=1
The within mean of Eq. (5) is similar to that of Eq. (2); therefore, to investigate the
impact of AI on employment, based on the selection and definition of the variables
above and mapping the research framework to an empirical model, we constructs the
following linear regression model:
ESit = 𝛿0 + a1 AIit + a2 CVit + 𝜇i + 𝜈t + 𝜀it (6)
where subscripts t and i, respectively, represent time and individual. 𝜇i , 𝜈t , and 𝜀it
represent individual effect, time effect, and random disturbance terms, respectively.
𝛿0 is the constant term, a is the parameter to be fitted, and CV is the series of control
variables. To further discern whether a mediating effect is evident for mechanism
variables in the process of AI affecting employment, only the influence of AI on
mechanism variables is tested in the modeling process, referencing Jiang (2022), to
overcome the inherent defects of intermediary effects. On the basis of Eq. (6), the
following econometric model is constructed:
Mediait = 𝛿0 + 𝛽1 AIit + 𝛽2 CVit + 𝜇i + 𝜈t + 𝜀it (7)
where Media represents the mechanism variable, 𝛽1 represents the degree of influ-
ence of AI on mechanism variables, and its significance and symbolic direction are
emphasized. The meaning of the remaining variables is consistent with Eq. (6).
4.3 Data sources
We use panel data from 30 provinces (municipalities and autonomous regions)

in China (samples from Tibet, Hong Kong, Macao, and Taiwan are excluded due
to data availability) from 2006 to 2022 for our statistical investigation. The raw
data on the density of installed industrial robots and the number of workers in the
13
Table 1 Variable descriptive statistics

Variable Code Mean Std. Dev Min Max
Employment scale ES 13.629 1.058 11.115 16.138

Artificial intelligence AI − 4.012 1.813 − 9.209 − 0.367
Road accessibility RA 9.653 0.851 6.918 11.535
R&D RD 9.721 0.857 6.918 11.608
Wage cost WC 10.864 0.553 9.654 12.289
Industrial structure IS 0.128 0.395 − 0.601 1.665
Virtual agglomeration VA 0.715 0.966 − 1.526 2.818
Marketization MK 1.869 0.318 0.846 2.537
Macro-control MC − 1.502 0.402 − 2.356 − 0.277
Urbanization UR 4.013 0.240 3.313 4.495
Capital deepening CD 4.211 0.294 2.628 6.092
Division of labor refinement DLR 0.037 0.039 0.001 0.325
Labor productivity LP 12.624 0.396 11.428 13.791
Table 2 Result of baseline regression

Variable (1) (2) (3) (4) (5)
AI 0.314*** 0.303*** 0.136* 0.487*** 0.949***

(15.77) (11.35) (1.77) (9.74) (33.55)
Control variables No Yes No Yes Yes
Individual effect No No Yes Yes Yes
Time effect No No No No Yes
R-square 0.2903 0.9434 0.0024 0.6447 0.9580
*** and * are significant at the 10% and 1% levels, respectively, and the t statistic is reported in parenthe-
ses. The results are calculated by the reg and xtreg commands of Stata software
manufacturing industry are obtained from the IFR and the China Labor Statistics
Yearbook. The original data of the remaining indicators came from the China Statis-
tical Yearbook, the China Population and Employment Statistical Yearbook, China’s
Marketization Index Report by Province (2021), provincial and municipal Bureaus
of Statistics, and the Economy Prediction System global statistical data analysis
platform. Very few missing values are supplemented using linear interpolation.
Notably, although the IFR has yet to release the number of robots installed at the
country-industry level in 2020, it has published the overall growth rate of new robot
installations, which we use to calculate the 2020 robot stock. The descriptive statis-
tics of relevant variables are presented in Table 1.
13
5 Result
5.1 Baseline regression
To reduce the volatility of the data and potential heteroskedasticity, all the variables
are located, and to meet the classical assumptions of linear regression methods for
panel data as much as possible, we use robust clustering standard errors at the pro-
vincial level. The results of the Hausman test and F-test reject the null hypothesis at
a 1% level, indicating that the FE model is the best-fit model. Table 2 presents the
fitting results of the baseline regression.
The results of the two-way FE (TWFE) model in column (5) of Table 2 show
that the fitting coefficient of AI on employment is 0.949 and is significant at a 1%
level. The results in columns (1)–(4) show that the effects of AI on employment are
all positive and statistically significant. Consistent with previous research findings
(Wu et al. 2023), our results confirm that AI has a positive effect on employment
and job creation is greater than job destruction, confirming the employment creation
mechanism of technological progress. Research hypothesis 1 (H1) is verified. Con-
sistent with previous conclusions of existing literature, AI technology has increased
employment in the manufacturing sector and technological advances have a signifi-
cant creative effect (Tubaro et al. 2020; Valentini et al. 2023). Classical and neoclas-
sical economics view the market mechanism as a process of automatic correction
that can offset the job losses caused by labor-saving technological innovation. Under
the premise of the employment compensation theory, the new products, models,
and industrial sectors created by the progress of AI technology can directly promote
employment (Attar 2021). At the same time, the scale effect caused by advanced
productivity lowers product prices and increases workers’ incomes, which promotes
increased consumption, demand, and economic growth, driving output growth and
promoting employment (Ge and Zhao 2023). Based on our empirical results, we
contend that enterprises may adopt the strategy of machine replacement to replace
procedural and repetitive labor positions to pursue high efficiency and high prof-
its; however, AI improves enterprises’ production efficiency as well as production
capacity and scale economy. To achieve a favorable share of market competition,
enterprises will expand production scale. As new and more complex technologi-
cally enabled tasks continue to emerge, this eventually leads companies to hire more
skilled labor. Robot technology and application in developing countries are still in
their infancy at this stage. The application scenario and scope of robots and the auto-
mation technology represented by industrial robots has not been widely promoted,
which indicates that it will be a long time for the automation technology to replace
a considerable number of manual tasks, causing the destruction effect of automation
technology on jobs to be less apparent. The fundamental market circumstances of
China’s low-cost labor market indicates that that enterprises are beginning to prior-
itize technology upgrading and efficiency improvement when introducing industrial
robots. Implementing the machine replacement strategy is predominantly attributa-
ble to the labor shortage caused by high work intensity, high risk, simple machinery
13
repetition, and poor working conditions. Therefore, enterprises’ transformation to

intelligent processes is not simply chosen to save labor costs (Dixon et al. 2021).
5.2 Robustness tests
The baseline results show that the effect of AI on job creation is greater than the
substitution effect, and the enterprises promotion of automated processes increases
employment demand. We employ three methods to verify the robustness of our
benchmark results.
1. Replacing the explained variables. In addition to industrial manufacturing, robots

are widely used in service industries such as medical care, finance, catering, and
education. To reflect the dynamic change relationship between the manufacturing
sector’s employment share and that of all sectors, we replace the absolute number
of manufacturing employment with the ratio of the manufacturing industry to all
employment numbers.
2. Interaction FE model. The traditional panel FE model does not solve the endo-
geneity problem caused by unobservable variables varying across time and per
individual. The interactive FE model developed by Bai (2009) based on a linear
panel data model can control for the combined effects of individual heterogeneity
and time changes and eliminate the influence of fixed but unobserved confounding
factors on causal estimation results. This method is suitable for addressing endo-
geneity problems in panel data and can also capture time-varying characteristics
and improve the goodness of fit. The improved model fully considers the impact
of various uncertain factors in the real economy and the heterogeneity of indi-
vidual responses to these impacts in addition to expanding the general form of the
bidirectional FE model. Based on principal component analysis and referencing
strategies from previous research (Bai et al. 2023; Wen et al. 2023; Shen et al.
2023), we revise Eq. (6) as follows:
ESit = 𝛿0 + c1 AIit + c2 CVit + 𝜆i + 𝜈t + 𝜆�i Ft + 𝜀it (8)
where 𝜆′i is the factor load, Ft is the common factor, and 𝜆′i Ft is the interaction
FE.
3. Machine learning regression. The machine learning model has a higher goodness
of fit and effect in fitting predicted data, and its mean square error and mean abso-
lute error are more minor (Wang et al. 2022b). Gradient descent is an optimization
algorithm widely used in machine learning and deep learning. The core idea of the
algorithm is to identify the local minimum (or maximum) value of a function by
continuously updating the parameters along the gradient direction of the function.
Gradient descent has an extremely important role in machine learning models,
from simple linear regression to complex deep neural networks. Modern machine
learning methods have an increasingly relevant role in economic analysis, deci-
sion making, and forecasting (Wu and Chen 2023); thus, we apply this method
for our third robustness test.
13
Table 3 Robustness and endogeneity tests

Variable Robustness Endogenous
Method 1 Method 2 Method 3 First stage Second stage
AI 0.113*** 0.973*** 0.812 0.968***

(4.55) (24.13) (8.87)
IV − 0.006***
(− 3.02)
Control variables Yes Yes Yes Yes Yes
Individual effect Yes Yes Yes Yes Yes
Time effect Yes Yes Yes Yes Yes
Underidentification test 9.447***
Weak identification test 19.135
*** is significant at the level of 1%, and the t statistic is reported in parentheses
In Table 3, method 1 confirms that AI has a positive impact on the manufacturing

industry’s employment share, showing that AI increased the proportion of employ-
ment in the manufacturing industry, the use of AI generates more derivative jobs for
the manufacturing industry, and enterprises’ labor force demand has increased. The
results of method 2 show that the influence of robots on employment remains sig-
nificantly positive after increasing the control variables, with no evident social phe-
nomenon of machine replacement. The results of method 3 show that the weight of
AI is 81.2%, indicating that AI can explain a large majority of the increased manu-
facturing ES and has a significant positive promotional effect. The above three meth-
ods confirm the robustness of the baseline regression results.
5.3 Endogeneity
Although this study selects more control variables to alleviate the endogene-
ity problem caused by missing variables, the bidirectional causal relationship
between labor demand and robot installation (for example, enterprises passively
adopting the machine replacement strategy in the case of labor shortages and
recruitment difficulties) still threatens the accuracy of the statistical inference
results in this paper. To exclude this potential endogeneity problem, we employ
the two-stage least square method (2SLS). In general, the cost factor that enter-
prises must consider when introducing industrial robots includes the comparative
advantage between the cost of machinery and equipment and labor wages and the
cost of electricity to maintain efficient operation of machinery and equipment.
Changes in industrial electricity prices alter the game conditions between install-
ing robots and hiring workers, and decision makers must re-weigh the costs and
benefits of intelligent transformation. Changes in industrial electricity prices may
impact enterprises’ demand for labor; however, this path does not directly affect
the labor market but is based on robots’ power consumption, work efficiency, and
equipment prices. Therefore, industrial electricity prices are exogenous relative to
employment and the demand for robots is correlated.
13
Table 4 Results of gender and infrastructure heterogeneity tests

Variable Male Female Pilot area Non-pilot area
AI 0.986*** 1.015*** 1.050*** 0.975***

(31.51) (21.38) (42.12) (21.09)
Control variable Yes Yes Yes Yes
Individual effects Yes Yes Yes Yes
Time effects Yes Yes Yes Yes
*** is significant at the 1% level, and the t statistic is reported in parentheses
Electricity production and operation can be divided into power generation,

transmission, distribution, and sales. China has integrated export and distribution,
with two critical prices in practice: on-grid and sales tariffs (Yu and Liu 2017).
The government determines the on-grid tariff based on different cost-plus mod-
els, and its regulatory policies have roughly gone through the course of princi-
pal and interest repayment, operating period pricing, to benchmark pricing. The
sales price (also known as the catalog price) is the price of electric energy sold
by power grid operators to end users, its price structure is based on the electric
heating price implemented in 1976, and differentiated pricing is implemented for
industrial and agricultural electricity. Generally speaking, the government depart-
ments formulate the on-grid tariff, integrating the interests of power plants, grid
enterprises, and end users. As China’s thermal power installed capacity accounts
for more than 70% of generators’ installed capacity, an essential factor affecting
the cost of industrial internet access is the price of coal. The pricing strategy of
sales electricity price is not determined by market-oriented transmission and dis-
tribution electricity price, on-grid electricity price, and tax, but more by the goal
of “stable growth and ensure people’s livelihoods” (Tang and Yang 2014). The
externality of the feed-in price is more robust; thus, we use chooses the feed-in
price as an IV.
Table 3 shows that the IV in the first stage negatively affect the robot installa-
tion density at the 1% level. This indicates that high industrial electricity prices
will discourage manufacturers from introducing and installing robots. The results
of the IV validity test indicates no weak IV problem or unidentifiable problems
in this variable, satisfying the principle of correlation and exclusivity. The second
stage results confirm that robots still positively affect the demand for labor at the
1% level, but the fitting coefficient is higher than that of our benchmark regression
model. In summary, the results of fitting the calculation with the causal inference
paradigm validate the conclusion that robots create more jobs and increase enter-
prises’ labor demand. In other words, the causal logic of AI promoting manufac-
turing employment in China has been demonstrated.
13
6 Heterogeneity and mechanism tests
6.1 Gender heterogeneity
The quantity and quality of labor required by various industries in the manufac-
turing sector vary considerably. One study revealed that although the application
of emerging technologies will generate the development of new industries and
establish novel employment opportunities, it will also produce new requirements
for workers’ skills, and differences in the nature of women’s and men’s jobs may
make women more vulnerable to the impact of robot installation than men (Li
and Liang 2016). Therefore, this study next analyzes the impact of AI on gender
equality in the job market.
Table 4 reveals that AI has a significant positive impact on both male and
female workers’ employment, indicating that AI technology does not have a het-
erogeneous effect on the dynamic gender structure. Comparing the coefficients
of the two (estimated results for men and women) indicates that robots have a
more significant promotional effect on female employees. Therefore, in contrast
to the conclusions of previous studies that technology will replace more female
employees (Zhou et al. 2019), this study demonstrates that technology benefits
women’s employment more. AI has significantly improved the working environ-
ment for front-line workers, reduced labor intensity, enabled people to cease per-
forming dirty and heavy work tasks, and indirectly improved the job adaptability
of female workers. Automation and AI make the working schedules, locations,
and tasks more flexible, which correspondingly improves the working freedom
of female workers and alleviates the balance and choice between family and
career for women. At the same time, women have comparative advantages in
cognitive skills that enable them to pay more nuanced attention to the details of
work (Filippi et al. 2023). By introducing automated technology, companies are
increasing the demand for cognitive skills such as mental labor and sentiment
analysis and increasing the benefits for female workers (Wang and Zhang 2022).
Most importantly, in the digital economy era, digital technology, represented by
AI, promotes the formation of egalitarian gender concepts (Lu et al. 2023).
6.2 Heterogeneity in the degree of digital infrastructure development
The digital infrastructure development level in the economy and society has a
significant impact on industries’ digital transformation. The Chinese government
selected eight provinces as national big data comprehensive pilot zones (NBD-
CPZs) in 2015 and 2016 based on the level of local digital infrastructure develop-
ment and the frequency of data element transactions. This policy aimed to pro-
duce reliable experiences in promoting the digital transformation of economic
entities, improving the efficiency of data element circulation, and promoting
high-quality economic development. The pilot policy areas themselves are also
more advanced in terms of digital economy scale and AI applications. Therefore,
13
Table 5 Results of industry Variable LI CI TI

heterogeneity test
AI 0.052*** 0.038*** 0.026***
(3.29) (3.60) (4.80)
Control variable Yes Yes Yes
Individual effects Yes Yes Yes
Time effects Yes Yes Yes
*** is significant at the 1% level, and the t statistic is reported in

parentheses
this study divided the sample based on the pilot list of NBDCPZs to explore the
impact of AI on employment under different digital technology infrastructure and
facilities development levels.
Table 4 reveals that the regression coefficients of AI on employment in the two
types of provinces are 1.050 and 0.975, respectively, which are both significant at
the 1% level. However, comparing the regression coefficients of the two indicates
that AI has a stronger impact on employment in the provincial NBDCPZ sample.
This conclusion means AI can create more jobs in provinces with complete digi-
tal infrastructure and well-developed data factor markets. In other words, the rapid
development of modern digital technologies, big data applications, and network
infrastructure strengthens the positive impact of AI on employment. When a city’s
digital technology facilities, policies, and systems related to the digital economy
function effectively and efficiently, the productivity of production factors can be
fully achieved, production factors such as talent, resources, and technology will flow
between industries and departments, and production and economic scales of the
whole society will rise. Infrastructure investment exerts strong multiplier, correla-
tion, and spillover effects. As Metcalfe’s Law suggests, the impact of universal digi-
tal technology has a scale effect on the economy and society (Madureira et al. 2013).
AI based on mobile networks and data information can promote the transformation
of siloed regional economies into highly integrated economic communities, form-
ing super urban clusters with reasonable IS and labor divisions. In the urban eco-
nomic network, economic, institutional, and information barriers between regions
will be mitigated, allowing market entities from different cities to conduct transac-
tions more easily and exchange knowledge across time and space. Therefore, AI will
alleviate the division of labor markets between regions and improve the matching
rate between vocational skills and job demands. In addition, with the increase of
mobile internet penetration, the integration of AI and various industries will become
the norm and drive the process of digital industrialization and industrial digitaliza-
tion. The resulting network scale effect will rise further, reshaping the job market,
employment ecology, and employment structure.
6.3 Industry heterogeneity
Considering the significant differences in the combination of factors in differ-

ent industries in China’s manufacturing sector, a significant gap in the installation
13
Table 6 Results of the Variable CD LP DLR VA

mechanism test
AI 0.049*** 0.058*** 0.593** 0.201**
(3.25) (3.28) (7.39) (2.38)
Control variable Yes Yes Yes Yes
Individual Effects Yes Yes Yes Yes
Time Effects Yes Yes Yes Yes
*** and ** are significant at the 1% and 5% levels, respectively, and

the t statistic is reported in parentheses
density of robots, even with the same scale of AI density, opposite employment phe-
nomena may occur in industries with different production characteristics. We divide
manufacturing enterprises according to the number of employees and their salary
level, capital stock, R&D investment, and patent technology into labor-intensive
(LI), capital-intensive, and technology-intensive industries.
Table 5 reveals that the impact of AI on employment in the three types of indus-
tries is significantly positive, consistent with the results of Beier et al.’s (2022) study.
LI industries can absorb more workers, and workers in the industry are more able to
share digital dividends, which generally aligns with our expectations (in the LI case,
the regression coefficient of AI on employment is 0.052, which is significantly larger
than that of the other two industries). This finding indicates that enterprises use AI
to replace the labor force of procedural and process-based positions in pursuit of
cost-effective performance; however, the scale effect generated by improving enter-
prise production efficiency increases labor demand, exerting productivity and com-
pensation effects. For example, automated guiding vehicle robots relieve workers
from monotonous and repetitive high-intensity tasks, achieving uncrewed operation
of storage links and automatic handling of goods, semi-finished products, and raw
materials in the production process, reducing the cost of storage and improving the
efficiency of logistics handling, increasing the availability of enterprises’ investment
capital to expand market share and extend the industrial chain.
6.4 Mechanism tests
6.4.1 The mechanism of AI on increasing employment scale
Table 6 shows that the fitting coefficients of AI for CD, LP, and division of labor are
0.049, 0.058, and 0.593, respectively, and are all significant at the 1% level, indi-
cating that AI promotes employment through the above three mechanisms, verify-
ing research hypothesis 2 (H2). Intelligent transformation opens up the internal and
external data chain, improves the combination of production factors, reduces costs,
and increases efficiency, advancing enterprises’ high-quality development. At the
macro-level, the impact of robotics on social productivity, IS, and product prices
will affect enterprises’ labor market demand. At the micro-level, robot technol-
ogy changes employment opportunities, skill requirements, and forms of employ-
ment and impacts labor supply and demand matching. The combination of price
13
and income effects can enhance the effect of technological progress on employment
creation. While improving LP, AI technology reduces production costs. In the case
of constant nominal income, the market will increase product demand, which drives
industrial scale expansion and increases output, resulting in increased labor demand.
Integrating robotics also refined the division of labor. Comparing the regression
coefficients of the three intermediary variables reveals that AI has the greatest
impact on DLR, indicating that the role of AI technology in creating jobs in pro-
ducer services is significant and far-reaching. The development of AI technology
reshapes the manner in which labor resources are allocated and flow, increasing the
global demand for high-tech labor. The development of new models such as plat-
form and sharing economies has reduced the cost of production services and market
transactions considerably, resulting in the rapid development of productive service
industry and increasing employment demand.
6.4.2 The indirect mechanism of AI on increasing employment scale
Table 6 also shows that the fitting coefficient of AI to VA is 0.201 and is significant
at a 5% level, indicating that AI and digital technology can promote employment
by promoting enterprises’ degree of agglomeration in the cloud and network. This
finding verifies research hypothesis 3 (H3). The industrial internet, AI, collabora-
tive robots, and optical fidelity information transmission technology are essential for
advancing the future manufacturing industry, and smart factories are the ultimate
direction of manufacturing. Under the intelligent manufacturing model, through
cloud links, industrial robots, and autonomous management, the proximity advan-
tage of geographic spatial agglomeration gradually dissipates. The pan-connectiv-
ity features of digital technology break through the situational constraints of work,
reshaping static, linear, and demarcated organizational structures and management
approaches of the pre-digital industrial era and increasingly dynamic, network-
based, borderless organizational forms, as traditional work tasks can be conducted
on a broader network platform employing online office platforms and virtual meet-
ings. While promoting cost reduction and increasing efficiency, it also promotes the
creation of new occupations using the network to achieve efficient VA. In contrast,
robot technology has also broken the fixed connection between people and jobs, and
the previous post matching mode of one person and one specific individual has grad-
ually evolved into an organizational structure of multiple posts and multiple people,
providing more diverse and inclusive jobs for different groups.
7 Conclusions and policy implications
7.1 Research conclusions
Automation technology represented by intelligent manufacturing profoundly affects

the labor supply and demand structure and significantly impacts economic and
social development. AI begins with technological innovation and the digital econ-
omy, as a new technological revolution, which will lead to the arrival of economic
13
singularity in the history of human development and represents a major leap forward
in the evolution of human history closer to free and comprehensive development.
This study analyzes the direct channels and indirect mechanisms of AI job crea-
tion from a theoretical level. Then, combined with the panel data of 30 provinces in
China from 2006 to 2022, we employ a bidirectional FE model to test the research
hypotheses. The main conclusions of this study are threefold.
1. Our ex ante judgment and ex post validation confirm that the impact of AI on
employment is positive. As contended in the theory of employment compensation,
consistent with existing literature (Sharma and Mishra 2023), the results of this
study demonstrate that the overall impact of AI on employment is positive, with
a pronounced job creation effect. This conclusion remains valid after replacing
variables, adding missing variables, and controlling for endogeneity.
2. The positive role of AI in promoting employment does not have the opposite
heterogeneity due to gender and industry differences. As Dettling (2017) argued,
internet-based information technology reduces heavy physical work, promotes
remote work and multitasking, helps women better balance work and family, ulti-
mately promoting gender-neutral work. Contrary to Hilbert’s (2011) assertion that
women find it challenging to adapt to the rapid updates of digital technology and
are excluded from the employment system due to the digital divide, the results of
this study indicate that AI has increased the digital welfare of female employees.
The heterogeneity results also indicate that AI has a stronger positive impact
in intensive industries and provinces with higher levels of digital infrastructure
development.
3. The mechanism analysis demonstrates that AI promotes employment through
mechanisms that advance CD, division of labor, and increased LP. The digital
trade from digital technology and internet platforms has promoted the transforma-
tion of traditional industrial agglomeration into VA, establishing a network flow
that is more prone to the spillover of knowledge, technology, and creativity, and
agglomeration effects and mechanisms are amplified exponentially. This study
innovatively determined that VA has become a new mechanism and an essential
channel for AI to promote employment.
In summary, the results demonstrated that the impact of AI on employment does

not replace the entire work task process but establishes partial automation of a pro-
duction link. Most tasks still require human–machine collaboration. As a result, AI
generates increased employment rather than reducing labor demand. The study’s
conclusions can dispel panic in the labor market regarding technological progress,
providing empirical validation and management suggestions for policymakers to
advance the goal of total employment.
7.2 Policy implications
This study investigates the argument that technology replaces jobs, revealing the
impact of automation technology on China’s current labor market and alleviating
13
the social anxiety caused by assumptions of machine replacement. The following

valuable policy proposals emerge from our research conclusions.
1. Increase investment in AI R&D and accelerate the high-end development of

domestic robots. The development of AI has improved production efficiency,
triggered changes in industrial and labor market structure, and generated new
jobs that filled the vacancy of human labor. The impact of AI on employment in
China is currently positive and helps to stabilize employment. It is essential to
do an excellent job of hard employment guarantee, accelerate the construction of
information infrastructure, advance the intelligent upgrade of traditional physical
infrastructure, and promote the inclusive development of intelligent infrastruc-
ture. 5G technology and the development dividend of the digital economy can be
used to increase investment in new infrastructure such as cloud computing, IoT,
blockchain, and the industrial internet and improve the level of intelligent appli-
cation across the industry. Accelerate the development of an AI standardization
system, promote construction of standard product applications of AI in various
fields, and fast-track the transformation of generative AI such as ChatGPT into
commercial application models. Enterprises and communication providers can
diversify industrial supply chains on the network through industrial intelligence
and automation transformation. At the same time, it is essential to speed up the
process of integrating industrial intelligence and cultivating emerging industries
and employment carriers with good prospects, particularly the development and
growth of emerging producer services. Of course, while encouraging the develop-
ment of technology companies and advanced technologies, antitrust is necessary.
The government needs to strengthen the regulation of monopoly in relevant laws.
In the face of large technology companies that have already grasped the social
infrastructure, the government needs to act as a regulator to control their pursuit
of power concentration to prevent them from constantly harvesting new enter-
prises by monopoly advantages to consolidate their status and power further.
2. Explore multiple development paths of clusters, and cultivate digital industrial
clusters and industrial VA. Digital industrial clusters are highly dependent on
digital technology innovation activities. The government should assume a guiding
and planning role, increase investment in the construction of cluster innovation
infrastructure and innovation activities, support the convergence and integration
of online and offline innovation factors, and improve the efficiency of innovation
activities. Promote the digital transformation of geographically clustered digital
enterprises, explore platform-based cluster resource sharing and capacity build-
ing, and advance the establishment of virtual industrial ecology across physical
boundaries through supply and demand docking, cloud collaboration, and edge
computing. Consider the construction of east and west data centers could leverage
the role of digital platform enterprises as chain masters, strengthen the develop-
ment structure of key open source technology innovation, hardware, and software
industry integration, data element standardization, circulation, and sharing, net-
work collaborative production, and other aspects, and advance the development
of emerging digital industry clusters.
13
3. Government departments should also improve the social security system and sta-
bilize employment through multiple channels. The first suggestion is to evaluate
and monitor the potential loss of employment for the low-end labor force from
AI through the cooperation of the government and enterprises to build relevant
information platforms, improve the transparency of labor market information,
and reasonably anticipate and address structural unemployment. Make full use
of big data, build a sound national employment information monitoring platform,
real-time monitoring of the dynamic changes in employment in critical regions,
fundamental groups, and key positions, releasing employment status informa-
tion, and providing an employment early warning, forecasting, and prediction
system. The second suggestion is to strengthen the backstop role of public ser-
vice, human resources departments at all levels, and social security departments
should improve the relevant social security system expediently. Adopting a mixed
guarantee model for the potential unemployed and improving laws and regula-
tions to protect the legitimate rights and interests of entrepreneurs and temporary
employees is crucial to expand the coverage of unemployment insurance and basic
living allowances. For the extremely poor unemployed or extreme labor shortage
groups, public welfare jobs or special subsidies can be used to stabilize basic
standards of living. The third suggestion is to cultivate an in-depth understanding
of the working conditions of bottom workers at the grassroots level, strengthen
statistical investigation and professional evaluation of AI technology and related
jobs, provide skills training, employment assistance, and unemployment subsidies
for workers who are unemployed due to the use of AI, and encourage unemployed
groups to participate in vocational skills training to improve the comprehensive
quality.
4. Education departments should promote reforming the education and training sys-
tem and deepen the coordinated development of industry–university research.
The contradiction between supply and demand in the labor market and the slow
transformation of the labor skill structure require urgent attention. The relevant
state administrative departments must take the lead in increasing investment in
basic research and form a scientific research division system in which enterprises
lead to increased investment in experimental development and multiple subjects
participate. Relevant departments should clarify the urgent need for talent in the
digital economy era, deepen education system reform as a guide, encourage all
kinds of colleges and universities to add related majors around AI and big data
analysis, accelerate research on the skill needed for newly emerging careers and
jobs, and establish a lifelong learning and employment training system that meets
the needs of the innovative economy and intelligent society to strengthen the
training of innovative, technical, and professional technical personnel. Focus on
cultivating interdisciplinary talent and AI-related professionals to improve work-
ers’ adaptability to new industries and technologies. Deepen the adjustment of the
education structure, increase the skills and knowledge of perceptual, creative, and
social capabilities, and cultivate the skills to perform complex jobs in the future
that are difficult to replace with AI. Improve the lifelong education and training
system, and encourage enterprise employees to participate in vocational skills
training and cultural knowledge learning through activities such as vocational
13
and technical schools, enterprise universities, and personnel exchanges. High-

skilled occupational group should strengthen the study of theory and the latest
practical results and continuously improve their professional quality and capa-
bilities. Medium and low-skilled professionals should have a professional spirit
and awareness of career planning to supplement theoretical knowledge based on
practice and continuously learn and enter high-skilled vocational positions.
8 Research limitations
This study has three shortcomings. First, we only investigate the effect and mecha-
nism of AI in promoting employment at a macro-level, which is limited by the large
data factors and small sample data and reduces the reliability and validity of statisti-
cal inference. Second, although the two-way FE model and IV method can represent
causal inference to a certain extent, they are not causal inference in a strict sense. Due
to the lack of policy pilots in industrial robots and digital parks, the topic cannot be
thoroughly evaluated for policy and the calculation of residents’ welfare. Third, the dif-
fusion effect caused by introducing and installing industrial robots advances the flow
of labor between regions, resulting in potential spatial spillover effects. This study did
not examine the spatial spillover effect. Future studies could employ the spatial Durbin
model or spatial generalized 2SLS method to incorporate geographical location infor-
mation into the model. Finally, a case study based on fieldwork or a microcosm study is
recommended. Particularly since the COVID-19 pandemic in 2020, China’s digital and
platform economies have rapidly developed, and the new mode of contactless distribu-
tion, unmanned retail, and remote working has become a new economic business form.
Therefore, a recent cohort tracking survey is urgently needed.
Funding This work was financially supported by the Natural Science Foundation of Fujian Province
(Grant number: 2022J01320).
Data availability The data used in this study are publicly available and have been correctly cited. Datasets
used or analyzed in the current study are available from corresponding authors upon reasonable request.
Declarations
Conflict of interest The authors have no relevant financial or non-financial interests to disclose.
Consent to participate Not applicable.
Consent for publication This article does not contain any studies with human participants performed by
any of the authors. The authors declare that the research was conducted in the absence of any commercial
or financial relationships that could be construed as a potential conflict of interest.
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Economic Change and Restructuring (2024) 57:34

Future jobs: analyzing the impact of artificial intelligence

Keywords Industrial robot · Labor market · Virtual agglomeration · Technological

The most basic purpose of a country’s economic development is to ensure

effect on employment it is essential for discerning the livelihood issues of digital

1. Will the impact of AI on employment be negative or positive?

The remainder of the paper is organized as follows. In Sect. 2, we summarize

Fig. 1 Research framework

2.1 Create or destroy? The contradictory of AI on employment

The social effect of technological progress has unique temporal characteristics in

2.2 Literature gaps and research contributions

The research regarding whether AI technology squeezes jobs is voluminous,

1. This study focuses on enterprises’ strategic decisions to install and introduce

3 Theoretical mechanism and research hypotheses

3.1 The direct influence of AI on employment

1. Integrating AI into enterprises’ production processes reduces the demand for

Hypotheses 1 (H1) AI will increase employment.

Hypotheses 2 (H2) AI promotes employment by improving labor productivity, deep-

3.2 Mechanism of virtual agglomeration

1. Digital knowledge spillover. Enterprises’ knowledge and information in pro-

Hypotheses 2 (H2) AI will promote employment by improving enterprises’ virtual

4 Materials and methods

4.1.2 Core explanatory variable

where N is a collection of industries involved in manufacturing, Robotit is the robot

dependence of VA on digital technology and network information platforms, we

To avoid endogeneity problems caused by missing essential variables and obtain

where the dummy variable is defined as Di = 1 for individual i, or 0 for another

We use panel data from 30 provinces (municipalities and autonomous regions)

Table 1 Variable descriptive statistics

Employment scale ES 13.629 1.058 11.115 16.138

Table 2 Result of baseline regression

AI 0.314*** 0.303*** 0.136* 0.487*** 0.949***

repetition, and poor working conditions. Therefore, enterprises’ transformation to

1. Replacing the explained variables. In addition to industrial manufacturing, robots

Table 3 Robustness and endogeneity tests

AI 0.113*** 0.973*** 0.812 0.968***

In Table 3, method 1 confirms that AI has a positive impact on the manufacturing

Table 4 Results of gender and infrastructure heterogeneity tests

AI 0.986*** 1.015*** 1.050*** 0.975***

*** is significant at the 1% level, and the t statistic is reported in parentheses

Electricity production and operation can be divided into power generation,

6 Heterogeneity and mechanism tests

6.2 Heterogeneity in the degree of digital infrastructure development

Table 5 Results of industry Variable LI CI TI

*** is significant at the 1% level, and the t statistic is reported in

Considering the significant differences in the combination of factors in differ-

Table 6 Results of the Variable CD LP DLR VA

*** and ** are significant at the 1% and 5% levels, respectively, and

6.4.1 The mechanism of AI on increasing employment scale

6.4.2 The indirect mechanism of AI on increasing employment scale

7 Conclusions and policy implications

Automation technology represented by intelligent manufacturing profoundly affects

In summary, the results demonstrated that the impact of AI on employment does

the social anxiety caused by assumptions of machine replacement. The following

1. Increase investment in AI R&D and accelerate the high-end development of

and technical schools, enterprise universities, and personnel exchanges. High-

Consent to participate Not applicable.

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2.1 Create or destroy? The contradictory of AI on employment

2.2 Literature gaps and research contributions

3 Theoretical mechanism and research hypotheses

3.1 The direct influence of AI on employment

3.2 Mechanism of virtual agglomeration

4 Materials and methods

4.1.2 Core explanatory variable

AI 0.314* 0.303* 0.136* 0.487* 0.949*

AI 0.113* 0.973* 0.812 0.968***

AI 0.986* 1.015* 1.050* 0.975*

6 Heterogeneity and mechanism tests

6.2 Heterogeneity in the degree of digital infrastructure development

* and are significant at the 1% and 5% levels, respectively, and

6.4.1 The mechanism of AI on increasing employment scale

6.4.2 The indirect mechanism of AI on increasing employment scale

7 Conclusions and policy implications