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The Potential for Sustained Productivity Impetus from GenAI

Author

Listed:
  • Martin Neil Baily
  • David M. Byrne
  • Aidan T. Kane
  • Paul E. Soto

Abstract

With the advent of generative artificial intelligence (GenAI), the scope of AI has increased dramatically, but its effect on labour productivity remains uncertain. Some innovations raise labour productivity growth as adoption spreads but the effect fades when the market is saturated. In contrast, two types of innovation — general purpose technologies (GPTs) and inventions in the method of invention (IMIs) — have long-lasting effects on productivity growth. GPTs (1) are widely adopted, (2) spur knock-on innovations, and (3) show continual improvement, refreshing the innovation cycle. IMIs increase the efficiency of the research and development process via improvements to observation, analysis, communication, and organization. We conclude there is suggestive evidence that GenAI is both a GPT and an IMI, a sign that its adoption will lead to higher labour productivity growth in the future.

Suggested Citation

  • Martin Neil Baily & David M. Byrne & Aidan T. Kane & Paul E. Soto, 2026. "The Potential for Sustained Productivity Impetus from GenAI," International Productivity Monitor, Centre for the Study of Living Standards, vol. 50, pages 5-26, Spring.
    • Handle: RePEc:sls:ipmsls:v:50:y:2026:1
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