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The Labor Market Effects of AI Automation and Augmentation

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  • Oleš, Tomáš
  • Roncone, Francesco

Abstract

Does artificial intelligence automate work or augment workers' productive capabilities? Our results show that it can do both, through distinct channels that conventional exposure measures obscure. We distinguish these channels by linking U.S. patents to occupations' tasks and tools, with patent-task matches capturing automation and patent-tool matches capturing augmentation. Using the origins and diffusion of historical AI breakthroughs to predict contemporary local exposure, we find large but opposing labor-market effects. A one-standarddeviation increase in AI automation reduces occupational employment by 21 percent, with little effect on wages; AI augmentation instead raises wages by 8 percent, alongside some employment growth. We also find that a larger AI share within each channel strengthens labor displacement through automation while shifting augmentation's effects from employment growth toward wage gains. The labor-market consequences of AI therefore depend critically on the balance between automation and augmentation rather than overall exposure alone.

Suggested Citation

  • Oleš, Tomáš & Roncone, Francesco, 2026. "The Labor Market Effects of AI Automation and Augmentation," GLO Discussion Paper Series 1821, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1821
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Keywords

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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
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • 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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