AI-Driven Occupational Structural Transformation and Service-Oriented Manufacturing

Pan Shan1, Guo Kaiming*2

1 Institute of Industrial Economics, Jinan University, Guangzhou, China

2 Lingnan College, Sun Yat-sen University, Guangzhou, China

Abstract: Occupational structural transformation is a common pattern during the steady growth of GDP per capita in major economies worldwide. In recent years, there has been a decline in the employment share of goods occupation and an increase in service occupation within the Chinese manufacturing industry, presenting a trend of occupational structural transformation and rapid development of service-oriented manufacturing. It is an important driving force and typical performance of the high-end, intelligent, and green development of the manufacturing industry. As a strategic general technology which leads the new round of technological revolution and industrial transformation, artificial intelligence (AI) has become a new fundamental force to accelerate the occupational structural transformation and service-oriented manufacturing development in China. Thus, this paper establishes a dynamic general equilibrium model with AI technology and occupational heterogeneity, showing the endogenous mechanism of occupational structural transformation. We find that when AI technology is biased towards goods occupation, and the elasticity of substitution between goods occupation and service occupation is less than 1, then AI will drive the transformation of occupational structure from goods to service within the manufacturing sector, increase the proportion of service-oriented manufacturing, improve labor productivity of manufacturing relative to service and stabilize the real output share of manufacturing. Promoting deeper integration of different occupations, intensifying R&D in AI technology and reducing labor mobility barriers between occupations can effectively accelerate the occupational structural transformation and industrial structural upgrading. We use theoretical analysis and numerical simulation method to show the theoretical mechanism by which AI affects occupational structural transformation and industrial structural transformation from a macroeconomic perspective, and put forward policy implications on how to promote the service-oriented manufacturing development and accelerate the construction of modern industrial system through AI innovation.

Keywords: Artificial intelligence; occupational structural transformation; service-oriented manufacturing; industrial structural transformation

JEL Classification Codes: O11; O14; O41

DOI: 10.19602/j.chinaeconomist.2025.07.03