AI as an Innovation in the Method of Innovation: Implications for Productivity Growth

Filippo Bontadini, Carol Corrado, Jonathan Haskel and Cecilia Jona-Lasinio

AEA Papers and Proceedings, 2026, vol. 116, 36-40

Abstract: This paper estimates AI’s impact on labor productivity growth, treating AI as both a general-purpose technology and an innovation in the method of innovation. Using a framework that separates upstream innovation from downstream (other) production suggests that AI boosts both upstream total factor productivity and intangible capital use downstream. We find that AI is already materially affecting official productivity measures in the United States. Software products and software R&D contributed 50 percent of the 2 percent average growth rate in nonfarm business labor productivity from 2017 to 2024 and 50 percent of its 1.2 percentage point acceleration compared to 2012–2017.

JEL-codes: C45 D24 G32 J24 L86 M15 O31 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/pandp.20261036

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