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Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition

Author

Listed:
  • Tania Babina
  • Anastassia Fedyk
  • Alex X. He
  • James Hodson

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.

Suggested Citation

  • Tania Babina & Anastassia Fedyk & Alex X. He & James Hodson, 2023. "Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition," NBER Working Papers 31325, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31325
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    Cited by:

    1. Kim Nguyen & Jonathan Hambur, 2023. "Adoption of Emerging Digital General-purpose Technologies: Determinants and Effects," RBA Research Discussion Papers rdp2023-10, Reserve Bank of Australia.
    2. A. A. Ternikov, 2023. "Artificial intelligence and the demand for skills in Russia," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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