A new study from the Federal Reserve Bank of New York suggests that the rise of remote work is a more significant factor than the spread of artificial intelligence in explaining the recent increase in unemployment among young college graduates.
Economists, including Natalia Emanuel, noted in a blog post that for workers under 29 with a college degree, about 64% of the post-pandemic rise in their unemployment rate can be attributed to the work-from-home trend.
The researchers compared unemployment rates across age groups for jobs categorized as "teleworkable," such as software engineering, and "non-teleworkable," such as mechanical engineering. They found the gap in unemployment rates between younger and older workers is most pronounced in teleworkable occupations, whereas for non-teleworkable jobs, the age gap has returned to pre-pandemic levels.
The economists argue that because remote work can hinder on-the-job training and development, firms are increasingly reluctant to hire younger workers for roles that can be done remotely.
While generative AI and other factors may play a larger role in shaping youth employment patterns in the future, the evidence so far indicates that the rise of remote work has indeed intensified the recent challenges faced by young college graduates.
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