The impact of China’s National Artificial Intelligence Innovation Pilot Zones on skill demand: a place-based policy perspective

This study examines how place-based policies influence labour skill demand, using China’s National Artificial Intelligence Innovation Pilot Zones (AIIPZ) as a quasi-natural experiment. Analysing over 66 million job postings from 2014 to 2024 and applying a difference-in-differences (DID) approach, we find that the AIIPZ policy led to a 20% increase in Artificial Intelligence (AI) hiring demand. Furthermore, the policy drives an upskilling effect, characterized by rising demand for non-routine analytic skills and a decline in routine cognitive and manual skills. Technology-intensive occupations experience the largest shifts, with the growth of AI and technical firms serving as the underlying mechanism. Our findings highlight the effectiveness of place-based policies in accelerating AI development, offering a model for economies aiming for technological leapfrogging. Meanwhile, the shift in skill demand towards AI and analytical skills over routine tasks suggests a global trend and urges policymakers to balance innovation with labour protections and social welfare.