The Short-Term Effects of Generative Artificial Intelligence on Employment

Generative Artificial Intelligence (AI) holds the potential to either complement workers by enhancing their productivity or substitute them entirely. We examine the short-term effects of the recent release of the large language models (LLM), namely ChatGPT and other image-based models, on the employment outcomes of freelancers on a large online platform. We find that freelancers in highly affected occupations suffer from the introduction of generative AI, experiencing reductions in both employment and earnings. We find similar effects studying the release of other image-based, generative AI models. Exploring the heterogeneity by freelancers’ employment history, we do not find evidence that high-quality service, measured by their past performance and employment, moderates the adverse effects on employment. In fact, we find suggestive evidence that top freelancers are disproportionately affected by AI. These results suggest that generative AI may transform the role of human capital in the organization by narrowing gaps across workers and reduce overall demand for workers.