Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition

65 Pages Posted: 12 Jun 2023 Last revised: 26 Jun 2023

See all articles by Tania Babina

Tania Babina

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

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

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Date Written: June 2023

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.

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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 (June 2023). NBER Working Paper No. w31325, Available at SSRN: https://ssrn.com/abstract=4475923

Tania Babina (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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HOME PAGE: http://taniababina.com

Anastassia Fedyk

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

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2220 Piedmont Avenue
Berkeley, CA 94720
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Alex Xi He

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 )

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9177449036 (Fax)

HOME PAGE: http://ai4good.org

Cognism ( email )

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HOME PAGE: http://cognism.com

Jožef Stefan Institute ( email )

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Slovenia

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

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