Feeling Economics: AI, Empathy, and the Future of Labor– A Systematic Review and Conceptual Model

As accelerating AI automation displaces routine intellectual and cognitive tasks, the labor market may be fun- damentally reshaping toward a ”feeling economy” that values human-centric skills like empathy, emotional intelligence (EI), and relational acuity. This systematic review synthesizes evi- dence on this transition, addressing critical gaps regarding its mechanisms, occupational shifts, and necessary policy responses. Following PRISMA guidelines, we systematically searched 13 databases (e.g., Google Scholar, OECD iLibrary, ILO) from 2010 to October 2025, screening 448 unique records to include 58 sources (peer-reviewed articles, institutional reports, and gray literature) appraised via MMAT and adapted checklists. Our mixed-methods synthesis reveals that AI displaces specific cognitive tasks but complements human EI, with no net employment decline yet observed; instead, demand is surging for care and relational roles. Thematic analysis identified key mechanisms, including task reorganization and feedback loops where AI- driven productivity boosts demand for human-centered skills. We present a novel conceptual model, visualized as a causal loop diagram, to illustrate these dynamics, showing reinforcing loops for EI upskilling and balancing loops for wage normalization. We conclude that AI is catalyzing a structural shift toward a ”feeling economy,” necessitating proactive, human-centric policies focused on EI upskilling and ethical AI regulation to ensure an equitable transition and mitigate inequality risks.