# Artificial Intelligence and Employment: A Delicate Balance Between Progress and Quality in China
## 4 Empirical Results and Analysis
### Heterogeneity Tests  
To account for variations in the penetration and impact of AI development across industries and the disparities between China's eastern and western regions, we divided the sample cities into two groups: eastern and central/western regions. Due to limited data availability, the northeast region was excluded from the heterogeneity analysis. Based on the baseline regression, the impact of AI on employment quality does not differ significantly  
\begin{table}
\begin{tabular}{c c c} \hline  & **(1)** & **(2)** \\ \hline  & **Emp** & **Emp** \\ \hline AI & \(-0.0000583\)* & \(0.0000116\)*** \\ \hline Gov & \(-0.3007269\)*** & \(-0.0394055\) \\ \hline Ope & \(-0.0324078\)*** & \(0.0069442\) \\ \hline Tra & \(0.0571042\)*** & \(0.001245\) \\ \hline Urb & \(-0.1025268\)*** & \(0.0656932\)*** \\ \hline City FE & Yes & Yes \\ \hline Year FE & Yes & Yes \\ \hline N & 70 & 100 \\ \hline R\({}^{2}\) & \(0.9170\) & \(0.9297\) \\ \hline \end{tabular} Note.* \(p<0.1\), *** \(p<0.01\).  
\end{table}
Table 4: Heterogeneity test.  
between the two regions. Table 4 presents the regression results for eastern cities, while column (2) displays the results for central and western cities.  
First of all, in central and western regions, AI adoption enhances manufacturing efficiency and boosts job skills, improving employment quality and creating higher-skilled jobs in traditional sectors. In contrast, the eastern region's advanced industrial framework leads to job displacement in low-skilled, labor-intensive sectors due to automation, reducing employment quality, especially for low-skilled workers.  
Secondly, central and western labor markets are more adaptable to AI-driven changes, offering opportunities for upskilling and higher wages as new industries emerge. In contrast, the eastern region, with its highly skilled workforce, faces intensified competition, especially for low-skilled workers. AI and automation may reduce job opportunities and degrade employment quality in these areas.  
The third point is that regional policies and investments vary, with central and western governments prioritizing labor market flexibility and industrial upgrading through AI and infrastructure development, which can improve job prospects in labor-intensive sectors. In contrast, the eastern region faces challenges balancing industrial upgrading with technology substitution. While leading in AI innovation, the region's reliance on traditional, low-value industries may lead to job losses or wage declines, negatively impacting employment quality for low-skilled workers.  
Lastly, in the midwest, businesses are more likely to adopt AI to enhance efficiency, creating demand for a highly trained workforce and potentially improving employment quality. In contrast, eastern businesses, with more advanced technological infrastructure, are more prone to using AI for job replacement, particularly in traditional manufacturing sectors. This could lead to job losses and a decline in employment quality for workers unable to meet the new technological requirements.