Abstract: Abstract：When artificial intelligence(AI) replaces labor in manufacturing industry, it also increases output and changes labor demand structure,and the structure of labor demand will change accordingly. Therefore, there is uncertainty about the role of AI technology in manufacturing employment. This paper constructs a two-part task model to describe how productivity effect and replacement effect of AI influence the employment in manufacturing and investigate the level that two effects are influencing by productivity growth and substitution elasticity of products. By using panel data from 28 provinces in China in 2003-2016, this paper tests the direction and level of AI′s effect on employment, furthermore, calculates the non-linear effects of AI on manufacturing employment on different level of productivity growth. The theoretical model points out that in most cases, AI′s replacement of labor in manufacturing will promote labor force flowing to service;when the breakthrough of AI technology leads to a huge increase in manufacturing productivity, the demand effect of output growth on labor force will be greater than that of technology substitution, and labor force will flow back into manufacturing industry.Empirical results show that the use of AI technology in China has significantly reduced the proportion of labor force in manufacturing industry, but its productivity growth will alleviate this inhibition to a certain extent. The panel threshold regression results show that when the productivity growth rate of AI technology is less than 0.0282, an increase of 1% in AI technology use will reduce the employment rate of manufacturing industry by 0.124%;on the contrary, when the productivity growth rate of AI technology exceeds the threshold, an increase of 1% in AI technology use will increase the employment rate of manufacturing industry by 0.179%. The important enlightenment of the research conclusion is to reveal the mechanism that the extrusion effect of AI technology on manufacturing employment will reverse with the significant breakthrough of AI technology, and promote the return of manufacturing labor force.

Key words: words：Artificial Intelligence, employment in manufacturing, Two-sector Task Model, Panel Threshold Regression