Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition

64 Pages Posted: 23 Mar 2022 Last revised: 16 Sep 2022

See all articles by Tania Babina

Tania Babina

Columbia University - Columbia Business School, Finance

Anastassia Fedyk

University of California, Berkeley - Haas School of Business

Alex Xi He

University of Maryland - Robert H. Smith School of Business

James Hodson

AI for Good; Cognism; Jožef Stefan Institute

Date Written: September 15, 2022

Abstract

We study the shifts in U.S. firms’ workforce composition and organization associated with the use of AI technologies. To do so, we leverage a unique combination of worker resume and job postings datasets to measure firm-level AI investments and workforce composition variables, such as educational attainment, specialization, and hierarchy. We document that firms with higher initial shares of highly-educated workers and STEM workers invest more in AI. As firms invest in AI, they tend to transition to more educated workforces, with higher shares of workers with undergraduate and graduate degrees, and more specialization in STEM fields and IT skills. Furthermore, AI investments are associated with a flattening of the firms’ hierarchical structure, with significant increases in the share of workers at the junior level and decreases in shares of workers in middle-management and senior roles. Overall, our results highlight that adoption of AI technologies is associated with significant reorganization of firms’ workforces.

Keywords: artificial intelligence, technological change, technology adoption, human capital, workforce composition, firm organization

JEL Classification: D22, E22, J23, J24

Suggested Citation

Babina, Tania and Fedyk, Anastassia and He, Alex Xi and Hodson, James, Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition (September 15, 2022). Available at SSRN: https://ssrn.com/abstract=4060233 or http://dx.doi.org/10.2139/ssrn.4060233

Tania Babina

Columbia University - Columbia Business School, Finance ( email )

3022 Broadway
New York, NY 10027
United States

Anastassia Fedyk

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Alex Xi He (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

HOME PAGE: http://www.alexxihe.com/

James Hodson

AI for Good ( email )

800 Arlington Boulevard
El Cerrito, CA 94530
United States
9177449036 (Phone)
9177449036 (Fax)

HOME PAGE: http://ai4good.org

Cognism ( email )

92 Albert Embankment
London, SE17TT
United Kingdom

HOME PAGE: http://cognism.com

Jožef Stefan Institute ( email )

Jamova cesta 39
Ljubljana, 1000
Slovenia

HOME PAGE: http://ailab.ijs.si

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
559
Abstract Views
1,893
rank
72,905
PlumX Metrics