Does AI adoption enhance productivity without proportionately increasing employment in the formal sector? A comparative study of the USA and India.

This study examines whether the adoption of AI enhances productivity without proportionally increasing employment in the formal sector, comparing trends in the United States and India. There are plenty of examples of productivity improvements that are driven by AI. Generative AI tools have increased service productivity by 15%, while developers using AI assistants are completing tasks up to 56% faster. Unfortunately, we appear to be far behind our productivity gains when it comes to increasing employment. The U.S. has half of the existing jobs with some potential for exposure to AI, and even amid climbing wages for not only specialized roles, but the demand for routine jobs that are automated, to preclude the presumed demand for jobs. In India, growth in AI-related job postings and salaries has been rapid; however, it's unclear whether the AI and/or external market forces are suppressing the growth rate of non-AI jobs in India, as we see a statistically significant reduction in non-AI job postings within three years of AI job posting adoption. These trends capture consistency in the productivity growth following AI adoption, which isn't matched by job creation (particularly, mid and low skill work). Policymakers must develop large-scale, population-level reskilling, policy reform regarding the education of the community, and broaden inclusion regarding AI adoption to safeguard labor-market impacts.