AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
AI as an Innovation in the Method of Innovation: Implications for Productivity Growth
AEA Papers and Proceedings
(pp. 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.Citation
Bontadini, Filippo, Carol Corrado, Jonathan Haskel, and Cecilia Jona-Lasinio. 2026. "AI as an Innovation in the Method of Innovation: Implications for Productivity Growth." AEA Papers and Proceedings 116: 36–40. DOI: 10.1257/pandp.20261036Additional Materials
JEL Classification
- C45 Neural Networks and Related Topics
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- L86 Information and Internet Services; Computer Software
- M15 IT Management
- O31 Innovation and Invention: Processes and Incentives