Abstract
This paper examines the possible effect of artificial intelligence (AI) on unemployment using a broad database of AI-related patents in 40 developed and developing markets from 2000 to 2019. The study employs a panel smooth transition regression (PSTR) model to analyse the relationship between artificial intelligence and unemployment under various inflation levels. The study contributes to the existing literature with several findings. First, results from our analysis confirm the non-linear relationship between artificial intelligence and unemployment depending on the threshold of inflation. In general, artificial intelligence increases unemployment until a certain inflation threshold is attained, and then the effect reduces afterwards. Second, the smooth mechanism employed in this analysis can capture individual estimates varying amongst countries over time.
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