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AI as an Innovation in the Method of Innovation: Implications for Productivity Growth

Author

Listed:
  • Filippo Bontadini
  • Carol Corrado
  • Jonathan Haskel
  • Cecilia Jona-Lasinio

Abstract

This paper estimates AI’s impact on labor productivity growth, treating AI as both a general-purpose technology and an innovation in the method of innovation. Using a framework that separates upstream innovation from downstream (other) production suggests that AI boosts both upstream total factor productivity and intangible capital use downstream. We find that AI is already materially affecting official productivity measures in the United States. Software products and software R&D contributed 50 percent of the 2 percent average growth rate in nonfarm business labor productivity from 2017 to 2024 and 50 percent of its 1.2 percentage point acceleration compared to 2012–2017.

Suggested Citation

  • Filippo Bontadini & Carol Corrado & Jonathan Haskel & Cecilia Jona-Lasinio, 2026. "AI as an Innovation in the Method of Innovation: Implications for Productivity Growth," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 36-40, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:36-40
    DOI: 10.1257/pandp.20261036
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    More about this item

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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