Artificial Intelligence and service sector in OECD countries
DOI:
https://doi.org/10.18559/rielf.2026.1.4486Keywords:
service sector, artificial intelligence, OECD, GMM regressionAbstract
Purpose: The emergence of artificial intelligence has profoundly transformed the labor market, particularly in the service sector, where many occupations have been redefined or displaced. This sector is now characterised by an increasing concentration of professions requiring skills in artificial intelligence. This article analyses the impact of artificial intelligence on employment in the service sector across the Organization for Economic Co-operation and Development (OECD).
Design/methodology/approach: This article used the Generalised Method of Moments (GMM) on annual secondary data covering the period 2012–2024 for 36 OECD countries, using STATA 17.0.
Findings: The findings suggest a replacement of jobs across the service sector, where the result of the GMM model shows that employment in the service sector decreases by 4.8% for each 1 point of the AI adoption index. Therefore, it is essential to bridge the intersectoral gap to ensure a smooth transition in the labor market.
Originality/value: This study introduces a novel measure of AI constructed using principal component analysis (PCA) based on patents filed by residents and nonresidents across OECD countries. The findings reveal a negative impact of AI on employment in the service sector, underscoring the need to rethink labor market policies and implement tailored upskilling and reskilling strategies to support service sector workers in adapting to emerging employment trends.
JEL Classification Codes
Econometrics (C01)
Estimation: General (C13)
Forecasting and Prediction Methods • Simulation Methods (C53)
Labor Force and Employment, Size, and Structure (J21)
Technological Change: Choices and Consequences • Diffusion Processes (O33)
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