Macroeconomic and Labor Market Drivers of AI Adoption in Europe: A Machine Learning and Panel Data Approach

Carlo Drago, Alberto Costantiello, Marco Savorgnan and Angelo Leogrande
Additional contact information
Alberto Costantiello: Dipartimento di Management, Finanza e Tecnologia (MFT), LUM University Giuseppe Degennaro, 70010 Casamassima, Italy
Marco Savorgnan: Dipartimento di Management, Finanza e Tecnologia (MFT), LUM University Giuseppe Degennaro, 70010 Casamassima, Italy

Economies, 2025, vol. 13, issue 8, 1-62

Abstract: This article investigates the macroeconomic and labor market conditions that shape the adoption of artificial intelligence (AI) technologies among large firms in Europe. Based on panel data econometrics and supervised machine learning techniques, we estimate how public health spending, access to credit, export activity, gross capital formation, inflation, openness to trade, and labor market structure influence the share of firms that adopt at least one AI technology. The research covers all 28 EU members between 2018 and 2023. We employ a set of robustness checks using a combination of fixed-effects, random-effects, and dynamic panel data specifications supported by Clustering and supervised learning techniques. We find that AI adoption is linked to higher GDP per capita, healthcare spending, inflation, and openness to trade but lower levels of credit, exports, and capital formation. Labor markets with higher proportions of salaried work, service occupations, and self-employment are linked to AI diffusion, while unemployment and vulnerable work are detractors. Cluster analysis identifies groups of EU members with similar adoption patterns that are usually underpinned by stronger economic and institutional fundamentals. The results collectively suggest that AI diffusion is shaped not only by technological preparedness and capabilities to invest but by inclusive macroeconomic conditions and equitable labor institutions. Targeted policy measures can accelerate the equitable adoption of AI technologies within the European industrial economy.

Keywords: artificial intelligence adoption; macroeconomic determinants; labor market structure; panel data analysis; machine learning models (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/13/8/226/pdf (application/pdf)
https://www.mdpi.com/2227-7099/13/8/226/ (text/html)

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:gam:jecomi:v:13:y:2025:i:8:p:226-:d:1717591

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().