AI adoption, productivity and employment: Evidence from European firms (www.eib.org)

A recent study exploring AI adoption among European firms reveals significant insights into the relationship between artificial intelligence, productivity, and employment. Analyzing data from over 12,000 non-financial firms across the EU and the US, researchers found that AI implementation boosts labor productivity by approximately 4%. This increase is primarily attributed to capital deepening rather than workforce reductions, suggesting that AI enhances worker output in the short term. Notably, medium and large firms benefit the most from AI integration, which is linked to higher innovation rates and increased wages among employees. The findings are crucial for the AI/ML community as they challenge the narrative that AI primarily leads to job displacement. Instead, the research indicates that a thoughtful approach to AI adoption can enhance productivity and support economic growth, provided that firms also invest in complementary resources like software, data, and employee training. This dual investment strategy is vital for companies aiming to leverage AI to its fullest potential, ensuring that the benefits of automation contribute positively to both the workforce and the economy.