Over the last five years, OECD countries have shown remarkable labour market dynamism, with employment rates at or near record-highs. In parallel, gender gaps in labour market participation have narrowed in regions across the OECD.
Strong labour demand has resulted in labour shortages in the most vibrant regions, while other regions continue to have untapped workforce potential. Similar disparities exist regarding labour productivity, with many regions with low employment rates also exhibiting lower levels of productivity.
This edition of Job Creation and Local Economic Development provides new evidence on how the advent of Generative AI can contribute to closing these regional gaps, while continuing to boost economic growth in the most dynamic regions. Generative AI, in addition to automation and other digital breakthroughs, offers significant potential to boost productivity, particularly in urban areas where a third of workers expect to be able to complete many of their tasks twice as quickly. Generative AI can also help to address growing labour shortages, especially in regions with an ageing population or that are experiencing population decline.
Sound policies are needed for all regions to unlock the full potential of generative AI, particularly rural regions that have further potential to boost jobs, productivity and incomes. Targeted programmes should focus on addressing place-specific obstacles, whether they relate to a region’s attractiveness to workers and capital, the quality of regional education and training systems, or regulatory frameworks. Adequate investment in digital infrastructure, not least to address existing, and often significant, urban-rural divides in access to high-speed internet, will also be needed.
Through novel estimates for 35 OECD countries that show the degree of exposure of regional labour markets to Generative AI, this edition of Job Creation and Local Economic Development highlights the full potential and impact of Generative AI, as well as opportunities to ensure that all regions are able to benefit.
In doing so, the report aims to provide policy makers at all levels of government, business and civil society with insights into the transformative potential of Generative AI for jobs, and recommendations to leverage AI to drive economic growth, enhance productivity, and create more resilient and inclusive labour markets.