Analysis of 25,000 workers and 7,000 workplaces across Denmark finds substantial investment in artificial intelligence but that ‘economic impacts remain minimal’
A new research paper has caused quite a stir in the tech world. It concludes that, despite businesses investing large sums in AI, they see little gain in productivity or labour market outcomes.
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There is, of course, a lot of excitement – and hype – around the potential of AI to free us from administrative drudgery, saving time we can better focus elsewhere so that we are more productive. But the new paper, ‘Large Language Models, Small Labor Market Effects’, is one of the first large-scale studies of what the technology really delivers… And it doesn’t seem all that much.
The extensive research was undertaken by economists Anders Humlum from the Booth School of Business, University of Chicago, and Emilie Vestergaard from the Department of Economics, University of Copenhagen. In 2023 and 2024, they carried out two surveys in Denmark of some 25,000 workers in 7,000 workplaces covering 11 occupations considered particularly ‘exposed’ to the automation of administrative processes through the use of AI chatbots.
Those 11 occupations are wide-ranging: accountants, customer support specialists, financial advisors, HR professionals, IT support specialists, journalists, legal professionals, marketing professionals, office clerks, software developers and teachers.
Across these different occupations there are common threads. First, say the authors of the new paper, ‘employers are now heavily invested in AI chatbots’: most employers encourage staff to use them, some 38% of surveyed businesses employ in-house AI models and some 30% of staff have been received training to use them.
Such employer-led initiatives increase use of AI in the workplace and notably reduce demographic disparities in take-up. For example, the authors note that where firms encourage use of AI, especially through training, the gender gap in adoption falls from 11.9 to 5 percentage points.
While the trend across these different occupations is more investment in and take-up of AI, there’s another common factor: the technology has had little positive effect.
‘AI chatbots have had no significant impact on earnings or recorded hours in any occupation,’ conclude the authors, ruling out effects larger than 1%. The users surveyed in the study reported time savings of just 2.8% – equivalent to a single hour in a 40-hour week.
Worse, the study found that in some cases the use of AI chatbots creates work for human workers.
Anders Humlum, a co-author of the paper, told the Register that, ‘One very stark example … is there are a lot of teachers who now say they spend time trying to detect whether their students are using ChatGPT to cheat on their homework.’
Humlum adds that the creation of new tasks in the workplace could be good for workers as it, ‘may boost their wages, if these are more high value added tasks.’
But note his use of ‘may’: this potential to improve wages hasn’t happened yet.
Despite the hype surrounding AI, concludes the paper, ‘two years after the fastest technology adoption ever, labour market outcomes — whether at the individual or firm level — remain untouched.’
- Read the full paper, ‘Large Language Models, Small Labor Market Effects’
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