Nobody knows how AI will reshape the labor market and society more broadly. But a growing body of research is trying to address those urgent questions. For example, see below for summaries of three new studies.

An emerging player to watch in this effort is the recently launched Microsoft AI Economy Institute. In a July announcement about the company’s pledge to donate $4B in cash and AI and cloud tech to K-12 schools, community colleges, and nonprofits, Microsoft described the institute as a corporate think tank that advances independent research and solutions to economic and social change driven by AI.

“We’re convening multidisciplinary experts—from researchers and international organizations to business leaders and policymakers—to translate this research into positive, lasting impact,” Juan Lavista Ferres, a corporate vice president and chief data scientist at Microsoft, wrote on LinkedIn. 

The first slate of 14 research projects is focused on how colleges can lead the AI transformation. For example, Morgan Frank, a senior fellow with the institute and a professor at the University of Pittsburgh, is exploring the impact of LLMs on college education and career outcomes. Another project, involving the NJ AI Hub, is focused on AI education and workforce development.

“The research we’re doing with the institute is really around what types of training, reskilling, and upskilling are necessary to help people be able to get jobs in the AI-boosted economy,” Jeffrey Oakman, an institute senior fellow and senior strategic AI hub project manager at Princeton University, says in a video about the research projects.

In an interview, Frank says more support is needed for basic research on AI’s impacts on the labor market. He pointed to a study he led, published in April, which tracked how AI exposure predicts unemployment risk. That research, which tapped statewide employment and wage data, will soon be extended to the county level, says Frank.

The institute is seeking proposals for its second round of research grants. Its call includes research on the impact of AI on entry-level jobs and opportunities the tech creates for two-year colleges.

“Part of the real challenge is how do we actually prepare students for a job force where in five years, things are going to change on them?” asks Stephanie Moore, a senior fellow with the institute and a professor at the University of New Mexico.

Uneven AI Impacts
+ Just two of eight major industry sectors—tech and media—are showing meaningful structural changes due to AI, finds MIT’s Project NANDA. Surveyed executives were hesitant to reveal the scope of layoffs due to AI, but it was 5 to 20% of customer support and administrative work, which are vulnerable roles due to outsourcing and process standardization. Roughly 80% of tech and media executives anticipated reduced hiring within two years.

Effects on Employment
+ AI adoption is expected to have only a modest and relatively temporary impact on employment levels, according to Goldman Sachs Research, which found that 2.5% of U.S. employment would be at risk if current AI use cases were expanded across the economy and reduced jobs proportionally to efficiency gains. Most at risk are computer programmers, accountants and auditors, legal and administrative assistants, and customer service workers.

Savings and Job Cuts
+ Major U.S. corporations could save $920B a year through the use of AI, largely due to employing fewer people, finds Morgan Stanley Research. Those savings represent 40% of the annual compensation expenses across the S&P 500, Axios reports. A mix of job cuts and enabling employees to perform higher-value work will drive projected gains. Companies also may replace workers largely through attrition rather than sweeping layoffs.