Di­git­al­isa­tion does not cost jobs – it cre­ates them

Many fear that digitalisation and artificial intelligence will lead to job losses. In reality, however, they tend to create more jobs. This is concluded in a new study by researchers from CBS and the University of Oxford.

The researchers analysed half a million job postings from 7,500 companies in the Danish labour market. They then examined how demand for digital skills is linked to changes in employment and productivity.

The conclusion is clear: companies that increasingly demand digital skills experience higher productivity, greater revenue and more employees.

“What surprised me most was how consistently digitalisation was associated with job growth rather than job losses. The public debate often focuses on technology replacing labour, but in our data we see that companies investing more in digital skills typically grow,” says Cédric Schneider, Associate Professor at CBS.

Productivity creates more jobs

According to the researchers, the explanation is that digital tools make companies more productive.

“And more productive companies can produce more cheaply, sell more and grow,” says Cédric Schneider and elaborates:

“When a company grows, it typically hires more employees. In our data, revenue and value-added increase in line with demand for digital skills. Employment tends to follow around a year later.”

Cédric Schneider adds that the researchers’ data show that a 10 percentage point increase in job postings requiring digital skills leads to 0.6 percent more employees in the following year.

Copenhagen pulls ahead of the rest

Although digitalisation creates growth overall, the benefits are unevenly distributed. When looking more closely at the map of Denmark, the differences become clear.

The Greater Copenhagen area sees the largest employment gains, particularly when companies invest in data analytics and AI.

North Jutland sees the weakest growth. This does not mean that jobs are disappearing on a large scale outside the biggest cities, but growth is not equally strong everywhere.

“The explanation is likely that Copenhagen has larger and more internationally oriented companies with many highly educated employees, especially those with IT degrees. We can see that companies with more managers also invest more, while smaller companies with a less educated workforce typically lag behind,” says Cédric Schneider.

Affects more occupational groups than expected

Although he emphasises that the study shows many different occupational groups benefit from growth linked to new technologies, there are still differences.

Managers, specialists, administrative employees and technicians benefit the most from these developments, while sales employees, skilled trades and low-skilled positions do not see the same gains.

“We do not see digitalisation destroying these jobs. But those employees do not share in the growth,” notes Cédric Schneider.

“But overall, we were surprised at how broad the effects were. Job growth was not limited to highly specialised tech employees,” he adds.

Implementation matters

The study also shows that increased growth is not only about new technology, but also about management.

“The companies that gain the most from digitalisation are not necessarily those with the most programmers. They are also those that are good at organising work around new tools,” says Schneider.

He therefore argues that continuing professional development for managers could be crucial in helping more companies turn new technology into growth and new jobs. He also points out that new digital technologies to some extent replace existing tasks, while simultaneously creating the economic basis for developing new ones.

“Overall employment rises after investment, which means more new jobs. But we also see a short-term increase in what economists call reallocation, where more employees move in and out. This suggests restructuring and new ways of working,” he says.

Technology does not lead to mass unemployment

Cédric Schneider adds that historically, new technologies have made certain existing skills redundant while simultaneously creating demand for new ones.

He also refers to economist David Autor from MIT, who has argued that two centuries of labour-saving technology have not resulted in mass unemployment because productivity gains increase output, raise incomes and create new tasks more quickly than old ones disappear.

Another economist, Daron Acemoglu, who received the Nobel Prize in 2024, describes this as a competition between a displacement effect and a productivity effect.

“Our data suggest that the productivity effect is currently prevailing for the average Danish company investing in digital skills,” says Cédric Schneider.