Artificial Intelligence, Firm Growth, and Industry Concentration

77 Pages Posted: 27 Aug 2020 Last revised: 7 May 2021

See all articles by Tania Babina

Tania Babina

Columbia Business School - Finance and Economics

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: May 7, 2021

Abstract

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

Suggested Citation

Babina, Tania and Fedyk, Anastassia and He, Alex Xi and Hodson, James, Artificial Intelligence, Firm Growth, and Industry Concentration (May 7, 2021). Available at SSRN: https://ssrn.com/abstract=3651052 or http://dx.doi.org/10.2139/ssrn.3651052

Tania Babina (Contact Author)

Columbia Business School - Finance and Economics ( 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

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
1,316
Abstract Views
5,094
rank
18,284
PlumX Metrics