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AI and employment in Europe

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  • Guarascio, Dario
  • Reljic, Jelena

Abstract

This paper contributes to the growing research on AI's labour market impact by presenting novel evidence on the heterogeneous employment effects of AI across EU countries from 2012 to 2022. While concerns persist about AI's disruptive potential, our findings show that occupations more exposed to AI technologies experience stronger employment growth, all else being equal. However, these effects are not uniform across the EU. Positive employment outcomes are concentrated in Innovation Leaders (Belgium, Denmark, Finland, the Netherlands and Sweden) and Strong Innovators (Austria, Cyprus, France, Germany, Ireland and Luxembourg), emphasising the context-dependent nature of AI's impact. These findings reflect the uneven distribution of innovation capabilities, with a country's innovation system and ‘absorptive capacity’ playing a crucial role in fully harnessing AI's potential for employment (and economic) growth. Ultimately, this research challenges the notion of AI as universally beneficial or harmful, highlighting its asymmetric effects across countries and occupations.

Suggested Citation

  • Guarascio, Dario & Reljic, Jelena, 2025. "AI and employment in Europe," Economics Letters, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176525000205
    DOI: 10.1016/j.econlet.2025.112183
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    References listed on IDEAS

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    Cited by:

    1. Nathalie Greenan & Dario Guarascio & Jelena Reljic, 2025. "AI and the labour market: opening the black box," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(4), pages 925-951, December.
    2. Flavio Calvino & Luca Fontanelli, 2025. "Decoding AI: Nine facts about how firms use artificial intelligence in France," LEM Papers Series 2025/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Wang, Daoping & Liang, Yaxi & Shen, Xinyan, 2025. "Can artificial intelligence assist banks in improving city entrepreneurship?," Finance Research Letters, Elsevier, vol. 83(C).
    4. Francesco Carbonero & Sergio Scicchitano, 2025. "Labour and technology at the time of COVID-19: can artificial intelligence mitigate the need for proximity?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(4), pages 1167-1203, December.
    5. Flavio Calvino & Luca Fontanelli, 2026. "Decoding AI: an early look at how French firms use AI," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 16(1), pages 51-93, March.
    6. Ludovic DIOSZEGI, 2025. "Romania’S Labour Market Exposure To Ai," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 34(2), pages 188-201, December.
    7. Gao, Zhiyuan & Zhao, Ying & Li, Lianqing & Hao, Yu, 2025. "Artificial intelligence and urban social risk in China: A spatial analysis," Technological Forecasting and Social Change, Elsevier, vol. 219(C).

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    More about this item

    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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