Automation and Job Displacement's Impact on the Labor Market in the USA

Abstract

Automation and artificial intelligence (AI) are causing changes in the United States labor markets, raising concerns about technology-induced job displacement. This study analyzes how technological advancements affect general employment levels and large U.S. company market capitalizations. My panel data spans from 1995 to 2023 and is comprised of 1,257 observations from 48 companies. I use two random-effects Generalized Least Squares regression models to analyze the data I collected and, in my first model, I test to see if increased technological advancement is significantly associated with a change in employment. My second regression tests if technological advancements are associated an increase in company market capitalization. The results indicate that AI and automation do not cause a significant change in employment demand, these technologies may significantly enhance company values, and they may significantly heighten investor confidence. There is an abundance of academic literature expressing concerns over the future of job-displacement from AI-related technologies, which highlights the necessity for policy interventions to reduce adverse effects on the workforce.