Generative AI to Drive Job Market Divide in OECD Regions

The OECD report reveals that Generative AI impacts job markets differently in urban and rural regions. With potential to alleviate labor shortages, AI may worsen income and digital divides. Policymakers must enhance digital infrastructure and literacy to ensure equitable AI benefits across regions.

A recent report by the OECD highlights how generative artificial intelligence (AI) will unevenly affect local job markets in various OECD countries, potentially widening existing income and productivity gaps between urban and rural regions. The study, titled 'Job Creation and Local Economic Development 2024,' notes that despite a decade of employment growth and more women joining the workforce, disparities remain prominent.

The employment surge has brought with it regional labor shortages, especially in densely populated urban areas like Lombardy, Italy, and Hamburg, Germany, as well as in regions suffering from population decline and aging. Generative AI emerges as a solution to address these shortages and enhance productivity, yet it also exacerbates regional disparities. The impact of AI on jobs ranges from 45% in urban centers such as Stockholm, Sweden, to just 13% in rural regions like Cauca, Colombia.

Urban workers face a higher likelihood of AI exposure, with about 32% affected compared to 21% of rural workers, posing a risk of deepening income and productivity gaps alongside digital divides. Even regions previously seen as low-risk are not immune, as high-skilled workers and women are among those increasingly exposed to AI's capabilities in non-routine tasks. OECD Secretary-General Mathias Cormann stresses the importance of prioritizing digital infrastructure and literacy to ensure that AI's benefits extend universally, addressing local skills shortages and supporting SMEs in adapting to this technological shift.

(With inputs from agencies.)