Nationalbanken: AI Adoption and its Impact on the Danish Labor Market

Artificial intelligence has been rapidly adopted across the Danish labor market, particularly driven by generative AI tools that automate and support cognitive work tasks. Danish companies utilize AI to a greater extent than businesses in other European countries. Use is most widespread among larger and more productive firms, younger workers, and individuals with higher education, while application rates vary significantly by industry, ranging from high adoption in information and communication to low adoption in construction.

An analysis of unique Danish microdata shows that companies implementing AI experience a lower growth rate in employment afterward compared to comparable businesses that do not use AI. Specifically, a firm starting to use AI in 2023 or early 2024 saw its employment level fall below its pre-trend relative to non-users. However, this reflects a dampening of employment growth rather than an absolute reduction in staff numbers, and no major changes have occurred in overall aggregate employment, which remains characterized by high job creation and low unemployment. Additionally, short-term impacts on wages appear limited, and an increase in new business startups has been observed particularly within industries with high AI usage.

These developments matter because AI significantly influences productivity, labor demand, and economic capacity. Although individual firms adapt their workforces, Denmark is well-positioned to benefit from the technology due to a flexible labor market, high workforce mobility, and extensive digitalization, though the future trajectory of employment remains subject to considerable uncertainty.