IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2509.15510.html

The (Short-Term) Effects of Large Language Models on Unemployment and Earnings

Author

Listed:
  • Danqing Chen
  • Carina Kane
  • Austin Kozlowski
  • Nadav Kunievsky
  • James A. Evans

Abstract

Large Language Models have spread rapidly since the release of ChatGPT in late 2022, accompanied by claims of major productivity gains but also concerns about job displacement. This paper examines the short-run labor market effects of LLM adoption by comparing earnings and unemployment across occupations with differing levels of exposure to these technologies. Using a Synthetic Difference in Differences approach, we estimate the impact of LLM exposure on earnings and unemployment. Our findings show that workers in highly exposed occupations experienced earnings increases following ChatGPT's introduction, while unemployment rates remained unchanged. These results suggest that initial labor market adjustments to LLMs operate primarily through earnings rather than worker reallocation.

Suggested Citation

  • Danqing Chen & Carina Kane & Austin Kozlowski & Nadav Kunievsky & James A. Evans, 2025. "The (Short-Term) Effects of Large Language Models on Unemployment and Earnings," Papers 2509.15510, arXiv.org.
    • Handle: RePEc:arx:papers:2509.15510
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2509.15510
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erik Brynjolfsson & Danielle Li & Lindsey Raymond, 2025. "Generative AI at Work," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 140(2), pages 889-942.
    2. Dmitry Arkhangelsky & Susan Athey & David A. Hirshberg & Guido W. Imbens & Stefan Wager, 2021. "Synthetic Difference-in-Differences," American Economic Review, American Economic Association, vol. 111(12), pages 4088-4118, December.
    3. Edward Felten & Manav Raj & Robert Seamans, 2021. "Occupational, industry, and geographic exposure to artificial intelligence: A novel dataset and its potential uses," Strategic Management Journal, Wiley Blackwell, vol. 42(12), pages 2195-2217, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ozge Demirci & Jonas Hannane & Xinrong Zhu, 2024. "Who Is AI Replacing? The Impact of Generative AI on Online Freelancing Platforms," CESifo Working Paper Series 11276, CESifo.
    2. Zara Contractor & Germ'an Reyes, 2025. "Generative AI in Higher Education: Evidence from an Elite College," Papers 2508.00717, arXiv.org.
    3. Pouliakas, Konstantinos & Santangelo, Giulia, 2025. "Are Artificial Intelligence (AI) Skills a Reward or a Gamble? Deconstructing the AI Wage Premium in Europe," IZA Discussion Papers 17607, Institute of Labor Economics (IZA).
    4. Contractor, Zara & Reyes, Germán, 2025. "Generative AI in Higher Education: Evidence from an Elite College," IZA Discussion Papers 18055, Institute of Labor Economics (IZA).
    5. William G. Resh & Yi Ming & Xinyao Xia & Michael Overton & Gul Nisa Gurbuz & Brandon De Bruhl, 2025. "Complementarity, Augmentation, or Substitutivity? The Impact of Generative Artificial Intelligence on the U.S. Federal Workforce," Papers 2503.09637, arXiv.org.
    6. Peeyush Agarwal & Harsh Agarwal & Akshat Rana, 2025. "What Work is AI Actually Doing? Uncovering the Drivers of Generative AI Adoption," Papers 2510.23669, arXiv.org, revised Oct 2025.
    7. Leonardo Gambacorta & Tullio Jappelli & Tommaso Oliviero, 2025. "Exploring household adoption and usage of generative AI: new evidence from Italy," BIS Working Papers 1298, Bank for International Settlements.
    8. Aldasoro, I. & Gambacorta, L. & Korinek, A. & Shreeti, V. & Stein, M., 2025. "Intelligent financial system: How AI is transforming finance," Journal of Financial Stability, Elsevier, vol. 81(C).
    9. Kauhanen, Antti & Rouvinen, Petri, 2024. "Assessing Early Labor Market Effects of Generative AI - Evidence from Population Data," ETLA Working Papers 121, The Research Institute of the Finnish Economy.
    10. Zara Contractor & Germán Reyes, 2025. "Generative AI in Higher Education: Evidence from an Elite College," CEDLAS, Working Papers 0359, CEDLAS, Universidad Nacional de La Plata.
    11. Engberg, Erik & Koch, Michael & Lodefalk, Magnus & Schroeder, Sarah, 2025. "Artificial intelligence, tasks, skills, and wages: Worker-level evidence from Germany," Research Policy, Elsevier, vol. 54(8).
    12. Lukas B. Freund & Lukas F. Mann, 2025. "Job Transformation, Specialization, and the Labor Market Effects of AI," CESifo Working Paper Series 12072, CESifo.
    13. Yang Haodong & Liu Jialin & Wang Gaofeng, 2025. "Knowledge Innovation Effect of University Computing Power in China: Evidence from the top500 Supercomputers," Research in Higher Education, Springer;Association for Institutional Research, vol. 66(1), pages 1-30, February.
    14. Abendroth Dias Kulani & Arias Patricia & Bacco F. Manlio & Bassani Elias & Bertoletti Alice & Bertolini Lorenzo & Bertrand Astrid & Bili Danai & Boucher Philip & Cachia Romina & Ceresa Mario & Chaslot, 2025. "Generative AI Outlook Report," JRC Research Reports JRC142598, Joint Research Centre.
    15. Sadeghi, Ali & Kibler, Ewald, 2022. "Do bankruptcy laws matter for entrepreneurship? A Synthetic Control Method analysis of a bankruptcy reform in Finland," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    16. Czarnitzki, Dirk & Fernández, Gastón P. & Rammer, Christian, 2023. "Artificial intelligence and firm-level productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 188-205.
    17. Dennis Shen & Peng Ding & Jasjeet Sekhon & Bin Yu, 2022. "Same Root Different Leaves: Time Series and Cross-Sectional Methods in Panel Data," Papers 2207.14481, arXiv.org, revised Oct 2022.
    18. Christoph Riedl & Eric Bogert, 2024. "Effects of AI Feedback on Learning, the Skill Gap, and Intellectual Diversity," Papers 2409.18660, arXiv.org.
    19. Federico Riccio & Jacopo Staccioli & Maria Enrica Virgillito, 2025. "European regional employment and exposure to labour-saving technical change: results from a direct text similarity measure," LEM Papers Series 2025/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    20. Carvajal, Daniel & Franco, Catalina & Isaksson, Siri, 2024. "Will Artificial Intelligence Get in the Way of Achieving Gender Equality?," Discussion Paper Series in Economics 3/2024, Norwegian School of Economics, Department of Economics, revised 28 Apr 2025.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2509.15510. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.