This paper analyzes the impact of AI diffusion on youth employment (ages 15 to 29) using subscriber records from the National Pension Service, a comprehensive administrative dataset. The major findings are as follows:

First, industries with high exposure to AI experienced significant declines in youth employment. Over the past three years, youth jobs decreased by 211,000, of which 208,000 were in industries highly exposed to AI. In contrast, jobs held by those in their 50s increased by 209,000, of which 146,000 were in industries highly exposed to AI. In the early phase of AI diffusion, junior employment decreased while senior employment increased, exhibiting a pattern of ‘seniority-biased technological change’. 

Second, in industries where AI is likely to augment human capabilities (characterized by high complementarity), youth employment decreased relatively less. This indicates that even with high exposure to AI, jobs with high AI complementarity are less likely to be automated.

Third, the impact of AI diffusion on wages remains unclear, unlike its clearer effect on employment. This suggests that due to wage stickiness—where wages are not easily adjusted in the short term—labor market adjustments first occur through changes in employment rather than wages.

AI tends to easily replace codified, routine tasks typically performed by young entry-level workers. Conversely, AI augments tasks requiring career-based tacit knowledge or social skills. These features of AI appear to be the fundamental drivers of seniority-biased technological change, where AI adoption impacts junior and senior roles differently within firms.

However, it is uncertain whether the contraction of youth employment observed in the early phase of AI diffusion will persist. Businesses may choose to pursue sustainable talent management strategies over the long term rather than making simplistic workforce cuts, as a decline in youth employment could weaken the future talent pipeline. Given that AI dissemination is likely to have lasting effects on the career trajectories of young workers and income inequality, as well as on corporate talent cultivation methods, it is essential to continuously monitor these future trends.