Artificial Intelligence: Intensifying or mitigating unemployment?

The rapid development of Artificial Intelligence (AI) is simultaneously fostering a proliferation of novel job opportunities while rendering some traditional roles obsolete and specific skills outdated. Previous research has failed to consider the short-, medium-, and long-term variations in AI's impact on unemployment, which may lead to an incomplete understanding of the AI-employment relationship. This paper examines daily data from January 4, 2013, to August 12, 2024, utilising advanced wavelet-based Quantile on Quantile Regression (QQR) methodology to assess AI's impact on the Unemployment Index (UI) across quantiles and time scales, with a sample size of 2820 drawn from a larger dataset totalling 4241 observations. The conclusions reveal that AI generally positively impacts UI in the short term, especially with AI at 0.6–0.7 quantiles, as automation replaces workers faster than new job roles emerge and skills transform. However, in the medium term, positive and negative effects balance as new jobs and skills emerge through continuous industrial restructuring. In the long run, AI predominantly mitigates UI by further enhancing economic development, fostering skill upgrading, and facilitating market adjustments, but this result does not hold during AI at 0.7 quantiles and UI at the highest quantiles, such as Coronavirus Disease 2019 (COVID-19). Under new technological revolution and industrial transformation, we formulate China-specific suggestions to avert potential AI-induced unemployment crisis from short-term, medium-term, long-term, and sector-specific perspectives.