Creative disruption or destructive inequality? Firm-level evidence on AI adoption and employment dynamics

This study investigates the employment effects of artificial intelligence (AI) adoption at the firm level in China’s manufacturing sector. Drawing on a panel of over 1700 listed firms from 2001 to 2024, we construct multiple measures of AI adoption using R&D investment, patent activity, and textual disclosures. Empirical analyses employing fixed-effects regressions, mediation and moderation models, and dynamic specifications show that AI adoption expands overall employment and increases wages for both employees and executives, while simultaneously widening intra-firm pay disparities. Gender balance improves as the male-to-female employment ratio declines, although the magnitude of this effect remains modest. Mediation analysis indicates that these outcomes arise from the expansion of technical and service roles, offset by contractions in production and managerial positions. Moderation results suggest that regional AI industry development and supportive policies amplify employment gains and alleviate inequality, with limited impact on gender composition. Overall, the findings highlight AI’s dual role in fostering productivity and inclusion while posing risks of inequality.