Generative AI and the Reorganization of Labor Demand
Generative artificial intelligence (AI) is expected to transform work, but less is known about how firms reorganize labor demand as the technology diffuses. Existing research has largely focused on which occupations are exposed to AI or whether exposed jobs decline. We extend this debate by examining whether firms adjust by changing where they hire, what jobs contain, or both. Using a nationwide dataset of job posti…
Appendix Appendix C Sector-Level Average Generative AI Exposure ($\beta$)
Sector
Average Exposure ($\bar{\beta}$)
Finance and Insurance (52)
0.584
Professional, Scientific, and Technical Services (54)
0.548
Information (51)
0.545
Educational Services (61)
0.495
Utilities (22)
0.483
Public Administration (92)
0.465
Manufacturing (31–33)
0.454
Management of Companies and Enterprises (55)
0.441
Real Estate and Rental and Leasing (53)
0.435
Mining, Quarrying, and Oil and Gas Extraction (21)
0.398
Construction (23)
0.397
Wholesale Trade (42)
0.386
Other Services (except Public Administration) (81)
0.378
Administrative and Support and Waste Management Services (56)
0.377
Unclassified / Unknown (99)
0.372
Agriculture, Forestry, Fishing and Hunting (11)
0.350
Health Care and Social Assistance (62)
0.350
Arts, Entertainment, and Recreation (71)
0.338
Transportation and Warehousing (48–49)
0.292
Retail Trade (44–45)
0.289
Accommodation and Food Services (72)
0.239
Notes: Average exposure is computed as the mean of posting-level $\beta$ within each two-digit NAICS sector, pooled across all quarters in the sample. Sectors are sorted in descending order of average exposure.
Table C1: Sector-Level Average Generative AI Exposure ($\beta$) by Two-Digit NAICS Code
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Generative artificial intelligence (AI) is expected to transform work, but less is known about how firms reorganize labor demand as the technology diffuses. Existing research has largely focused on which occupations are exposed to AI or whether exposed jobs decline. We extend this debate by examining whether firms adjust by changing where they hire, what jobs contain, or both. Using a nationwide dataset of job postings in the United States, covering all sectors of the economy, we construct a dynamic, posting-level measure of generative AI exposure with a two-stage large language model pipeline. The pipeline identifies the tasks described in each posting and classifies the extent to which generative AI can perform or assist them. We then decompose changes in aggregate exposure into two margins: reallocation of demand across jobs and redesign of tasks within jobs. We document three main findings. First, generative AI exposure is dynamic rather than fixed, changing substantially over time. Second, labor demand adjusts through both margins. Hiring reallocation explains the largest share of the aggregate decline in exposure, accounting for 52% on average, while within-job redesign becomes increasingly important, accounting for 39.5%. A complementary Oaxaca-Blinder decomposition shows that shifts in occupational composition account for about 90% of the exposure change attributable to observable job characteristics. Third, adjustment differs across the job ladder. Senior jobs adjust earlier and mainly through reallocation, whereas junior jobs adjust through a broader mix of reallocation, redesign, and their interaction. These findings suggest that labor-market adjustment to generative AI is a process of organizational reconfiguration, in which firms reshape both hiring demand and the task architecture of work.
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Retrieved from arXiv on 2026-10-09 in response to the search string “(all:"artificial intelligence" OR all:"machine learning" OR all:"generative AI" OR all:"deep learning" OR all:"reinforcement learning" OR all:"large language model") AND (all:"AI concepts" OR all:"types of AI" OR all:"AI fundamentals" OR all:"recognizing AI" OR all:"recognising AI" OR all:"general versus narrow AI" OR all:"narrow AI" OR all:"general AI" OR all:"machine intelligence" OR all:"AI strengths and weaknesses" OR all:"traditional software" OR all:"rule-based systems" OR all:"introduction to AI" OR all:"introduction to artificial intelligence" OR all:"artificial intelligence introduction" OR all:"AI primer" OR all:"foundations of artificial intelligence" OR all:"overview of AI" OR all:"understanding AI" OR all:"history of AI" OR all:"AI essentials" OR all:"AI terminology" OR all:"metaphors for AI" OR all:"AI fundamental concepts" OR all:"AI key concepts" OR all:"philosophy of AI" OR all:"critical AI literacy")”. arXiv served the resource and is not asserted to be its publisher or author.
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the standard ↗
Generative artificial intelligence (AI) is expected to transform work, but less is known about how firms reorganize labor demand as the technology diffuses. Existing research has largely focused on which occupations are exposed to AI or whether exposed jobs decline. We extend this debate by examining whether firms adjust by changing where they hire, what jobs contain, or both. Using a nationwide dataset of job postings in the United States, covering all sectors of the economy, we construct a dynamic, posting-level measure of generative AI exposure with a two-stage large language model pipeline. The pipeline identifies the tasks described in each posting and classifies the extent to which generative AI can perform or assist them. We then decompose changes in aggregate exposure into two margins: reallocation of demand across jobs and redesign of tasks within jobs. We document three main findings. First, generative AI exposure is dynamic rather than fixed, changing substantially over time. Second, labor demand adjusts through both margins. Hiring reallocation explains the largest share of the aggregate decline in exposure, accounting for 52% on average, while within-job redesign becomes increasingly important, accounting for 39.5%. A complementary Oaxaca-Blinder decomposition shows that shifts in occupational composition account for about 90% of the exposure change attributable to observable job characteristics. Third, adjustment differs across the job ladder. Senior jobs adjust earlier and mainly through reallocation, whereas junior jobs adjust through a broader mix of reallocation, redesign, and their interaction. These findings suggest that labor-market adjustment to generative AI is a process of organizational reconfiguration, in which firms reshape both hiring demand and the task architecture of work.
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