SMU SOE Seminar Series (April 26, 2024): AI Adoption, Productivity and Labor Composition

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TOPIC:

AI ADOPTION, PRODUCTIVITY AND LABOR COMPOSITION

ABSTRACT In today’s rapidly evolving technological landscape, there is a widespread belief that artificial intelligence (AI), or machine learning, have the potential to drive significant productivity gains in the near future. AI is often viewed as a General Purpose Technology (GPT), a transformative force with the potential to reshape industries and economies. However, there’s a notable productivity paradox, as productivity growth has been slower than expected despite the promise of AI. This paradox raises several important questions: Are our expectations for AI too optimistic? Is it still too early to realize its full potential? Or are there challenges in accurately measuring the impact of AI? To address these questions, I conduct a comprehensive study using data from five waves of recently released surveys on information and communication technology (ICT) usage in Denmark. The primary objective is to identify firms that have embraced AI. I then integrate this AI adoption data with conventional datasets that capture workforce composition and accounting variables. The results of the study are striking: (i) AI has rapidly diffused over just four years in the Danish economy, increasing from 7% in 2017 to 36% of surveyed firm in 2021 ; (ii) I find a strong selection effect, with more productive companies being more likely to adopt AI; (iii) notably, I observe a significant transformation in workforce composition among firms that adopted AI, especially in the hiring of technology workers, particularly in the IT and other information services sectors. Furthermore, preliminary evidence suggests: (1) an improvement in productivity in the short term among AI-adopting firms; (2) evidence indicating a complementary relationship between AI and skilled tech workers in industries that have heavily embraced AI. These findings shed light on the transformative potential of AI and its impact on productivity and workforce composition. Click here to view the CV.
		PRESENTER Frederic Warzynski Aarhus University
		RESEARCH FIELDS Industrial Organization Organizational Economics International Trade
		DATE: 26 April 2024 (Friday)
		TIME: 2pm - 3.30pm
		VENUE: Interactive Room #5015, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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