Artificial intelligence and unemployment: moderating effect of the agglomeration economy in countries with different income levels

We examine the effect of AI adoption on unemployment in countries with different income levels, considering two key moderators: internet access and population density, by estimating panel data for 61 countries (2021-2024). The Global AI Index is considered to measure AI development, the unemployment rate as the dependent variable, in addition to control and moderator variables. The results show that, in high-income countries, the use of AI has a negative and significant effect on unemployment, while, in middle- and low-income countries, the impact is less clear and not significant. The effect is reinforced when accompanied by a better technological infrastructure. Population density does not significantly moderate the relationship between AI and unemployment, especially in less developed economies.