Artificial Intelligence, Firm Growth, and Industry Concentration
77 Pages Posted: 27 Aug 2020 Last revised: 7 May 2021
Date Written: May 7, 2021
We study the use and economic impact of AI technologies among US firms. We propose a new human-capital-based measure of AI investments, using a unique combination of job postings and worker resume datasets. Our measure reveals a stark increase in AI investments across most sectors over the past decade. We document that firms that invest more in AI experience faster growth in sales and employment. While AI-investing firms do not see increased productivity, they grow through increased product offerings and geographic expansion. AI growth effects concentrate among the ex-ante largest firms, leading to higher industry concentration and reinforcing winner-take-most dynamics.
Keywords: artificial intelligence, technological change, technology adoption, economic growth, human capital, superstar firms, industry concentration
JEL Classification: D2, L1, N6, N8, O3, O14, G32
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