AI is simultaneously aiding and replacing workers, wage data suggest

Artificial intelligence’s impact on the labor market will depend on whether the technology automates or augments worker tasks. Early data on employment and wages in AI-affected industries suggest it may be doing both. The distinction between codified knowledge (for example, established information gleaned from textbooks) and tacit knowledge (understanding gained through experience) is important. If AI can replicate codified knowledge but not tacit knowledge, AI will automate jobs requiring codifiable (textbook) knowledge but complement jobs demanding experiential tacit knowledge. The distinction between codifiable and tacit knowledge further suggests that AI may substitute for entry-level workers but augment the efforts of experienced workers. The data indicate that wages are rising in AI-exposed occupations that place a high value on a worker’s tacit knowledge and experience.