Template-Type: ReDIF-Paper 1.0
Author-Name: Iñaki Aldasoro
Author-X-Name-First: Iñaki
Author-X-Name-Last: Aldasoro
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo
Author-X-Name-Last: Gambacorta
Author-Name: Rozalia Pal
Author-X-Name-First: Rozalia
Author-X-Name-Last: Pal
Author-Name: Debora Revoltella
Author-X-Name-First: Debora
Author-X-Name-Last: Revoltella
Author-Name: Christoph Weiss
Author-X-Name-First: Christoph
Author-X-Name-Last: Weiss
Author-Name: Marcin Wolski
Author-X-Name-First: Marcin
Author-X-Name-Last: Wolski
Title: AI adoption, productivity and employment: evidence from European firms
Abstract: This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12,000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption.
Creation-Date: 2026-01
File-URL: https://www.bis.org/publ/work1325.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1325.htm
File-Format: text/html
Number: 1325
Keywords: artificial intelligence, firm productivity, Europe, digital transformation
Classification-JEL: D22, J24, L25, O33, O47
Handle: RePEc:bis:biswps:1325