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The Effects of Artificial Intelligence on Jobs: Evidence from an AI Subsidy Program

Author

Listed:
  • Hellsten, Mark

    (University of Tubingen)

  • Khanna, Shantanu

    (Northeastern University)

  • Lodefalk, Magnus

    (The Ratio Institute)

  • Yakymovych, Yaroslav

    (Uppsala University)

Abstract

Artificial intelligence (AI) is expected to reshape labor markets, yet causal evidence remains scarce. We exploit a novel Swedish subsidy program that encouraged small and mid-sized firms to adopt AI. Using a synthetic difference-in-differences design comparing awarded and non-awarded firms, we find that AI subsidies led to a sustained increase in job postings over five years, but with no statistically detectable change in employment. This pattern reflects hiring signals concentrated in AI occupations and white-collar roles. Our findings align with task-based models of automation, in which AI adoption reconfigures work and spurs demand for new skills, but hiring frictions and the need for complementary investments delay workforce expansion.

Suggested Citation

  • Hellsten, Mark & Khanna, Shantanu & Lodefalk, Magnus & Yakymovych, Yaroslav, 2025. "The Effects of Artificial Intelligence on Jobs: Evidence from an AI Subsidy Program," Ratio Working Papers 386, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0386
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    JEL classification:

    • 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

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