Abstract
We examine employer and employee responses to the release of Generative AI by constructing a high-frequency, forward-looking measure of exposure to Generative AI. Using a generalized difference-in-differences approach, we find that, unlike previous generations of automation, Generative AI primarily affects white-collar jobs that require critical thinking and creativity. Moreover, we find a heterogeneous effect: Generative AI complements high-level white-collar jobs but substitutes for low-level ones. Consistent with the concept of skill-biased technological change, we further find that firms with greater exposure to Generative AI significantly increase emphasis on Generative AI and machine learning skills in job listings. Turning to employee reactions, we find a notable decline in their long-term outlook about their firms, although employee ratings of firms’ current conditions remain stable. Potential employees seek fewer interviews at firms more exposed to Generative AI, consistent with equilibrium hiring declining more at such firms. Our results suggest a mismatch in responses toward Generative AI between the positive responses of employers versus the more negative responses of even those employees whose jobs are complemented by Generative AI.