Return of the Solow-paradox in AI? AI-adoption and firm productivity

Asta Bäck (asta.back@vtt.fi), Arash Hajikhani (arash.hajikhani@vtt.fi), Angela Jäger (angela.jaeger@isi.fraunhofer.de), Torben Schubert (torben.schubert@isi.fraunhofer.de) and Arho Suominen (arho.suominen@vtt.fi)
Additional contact information
Asta Bäck: VTT, Postal: Finland
Arash Hajikhani: VTT, Postal: Finland
Angela Jäger: Fraunhofer Institute for Systems and Innovation Research ISI, Postal: Germany
Torben Schubert: CIRCLE, Lund University, Postal: CIRCLE - Centre for Innovation Research, Lund University, PO Box 117, SE-22100 Lund, Sweden
Arho Suominen: VTT, Postal: Finland

No 2022/1, Papers in Innovation Studies from Lund University, CIRCLE - Centre for Innovation Research

Abstract: AI-related technologies have become ubiquitous in many business contexts. However, to date empirical accounts of the productivity effects of AI-adoption by firms are scarce. Using Finnish data on job advertisements between 2013 and 2019, we identify job advertisements referring to AI-related skills. Matching this data to productivity data from ORBIS, we estimate the productivity effects of AI related activities in our sample. Our results indicate that AI-adoption increases productivity, with three important qualifications. Firstly, effects are only observable for large firms with more than 499 employees. Secondly, there is evidence that early adopters did not experience productivity increases. This may be interpreted as technological immaturity.Thirdly, we find evidence of delays of least three years between the adoption of AI and ensuing productivity effects (investment delay effect). We argue that our findings on the technological immaturity and the investment delay effect may help explain the so-called AI-related return of the Solow-paradox: I.e. that AI is everywhere except in the productivity statistics.

Keywords: Recruiting personnel; AI related jobs; Artificial Intelligence; Job Market; Text Mining; Firm performance; Productivity (search for similar items in EconPapers)
JEL-codes: D22 D24 O31 O32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2022-02-15
New Economics Papers: this item is included in nep-bec, nep-cwa, nep-eff, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://wp.circle.lu.se/upload/CIRCLE/workingpapers/202201_baeck.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:lucirc:2022_001

Access Statistics for this paper

More papers in Papers in Innovation Studies from Lund University, CIRCLE - Centre for Innovation Research CIRCLE - Centre for Innovation Research, Lund University, PO Box 117, SE-22100 Lund, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Torben Schubert (torben.schubert@circle.lu.se).