Economic Implications of Artificial Intelligence onLabourMarkets in Emerging Economies
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Abstract
This study investigates the relationship between artificial intelligence (AI) adoptionandemployment outcomes in emerging economies, using regression analysis to explore multipleeconomic and institutional variables. The findings reveal a statistically significant negativeassociation between AI adoption and employment rates, indicating that increased dif usionofAI technologies is linked to labour displacement, particularly in economies characterizedbylow-skilled, routine-intensive workforces. This underscores the concerns that, withoutcomplementary reforms, AI may exacerbate structural unemployment and inequality. Conversely, ICT infrastructure exhibits a positive and significant ef ect on employment, highlighting its role in enabling digital entrepreneurship, market access, and platform-basedwork. Education, proxied by mean years of schooling, shows a marginally positiveef ect, pointing to the underutilized potential of human capital in mitigating technology-inducedjoblosses. GDP per capita significantly enhances employment, af irming the growth-employmentnexus, though its impact is contingent upon the inclusivity and sectoral compositionof growth.Foreign Direct Investment (FDI), however, is found to be statistically insignificant, challenging assumptions about its automatic job-creating capacity in the absence of strongdomestic linkages. Labour market rigidity also negatively af ects employment, suggestingtheneed for more flexible yet protective regulatory frameworks. The study concludes withcriticalpolicy implications: prioritizing human capital development, expanding ICT infrastructure, fostering inclusive growth, maximizing the employment impact of FDI throughtargetedinterventions, and reforming labour regulations. A coordinated policy approach integratingtechnology, education, and institutional reform is essential to harness AI’s potential whilemitigating its disruptive ef ects. Ultimately, emerging economies must aligndigitaltransformation with inclusive employment strategies to navigate the challengesandopportunities of the Fourth Industrial Revolution
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