Economic Growth, AI Adoption and Human Capital Across the OECD: Evidence from a Panel ARDL Model

Technological progress is a key driver of long-term growth and increases in standards of living across generations, but its benefits often materialise with delay due to adjustment costs and the need for complementary investments. This study examines these dynamics for artificial intelligence (AI), whose rapid diffusion has raised expectations about its economic impact. As with previous waves of technological progress and innovation, there are also important concerns on how work will be shaped by the proliferation of AI as it may potentially benefit certain types of human capital. Using a panel ARDL model for 35 OECD countries from 1995 to 2017, we estimate the short- and long-run effects of AI adoption on growth and living standards. The ARDL framework captures the gradual adjustment process and allows us to incorporate human capital by interacting it with AI, assessing whether the benefits of AI differ across skill levels. Our preferred results, based on patents data and first differenced GMM, suggest that AI adoption already contributes to short-run growth and leads to long run improvements in standards of living, although these results are not supported in all contexts. Regarding the role of human capital, our aggregate data provides no evidence that AI benefits any particular group of workers, neither highly educated nor less-educated ones. Our research is limited by the current state of AI technology, which is advancing rapidly, and proxies available; therefore, the validity of our present, optimistic findings must be continually re-evaluated.