Artificial Intelligence and Employment Sentiment in Europe: Time Trends and Persistence

Abstract

This paper studies how developments in artificial intelligence (AI) affect employment sentiment in Europe. Using monthly data, we analyze the dynamic relationship between an employment sentiment indicator and a market-based AI index, explicitly accounting for persistence and long-memory behavior. We find that employment sentiment exhibits strong persistence and adjusts only gradually over time. AI-related developments systematically precede changes in employment sentiment, whereas the reverse relationship is not supported by the data. The interaction is concentrated at short- and medium-term horizons, indicating rapid expectation adjustments. Overall, the results suggest that AI influences labor market perceptions through expectation-driven channels with persistent effects.