VGSF - WU Vienna - LC

Anastassia Fedyk, Berkeley Haas, Haas School of Business

online via Microsoft Teams Live Events 17:30 - 18:45

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Anas­tas­sia Fe­dyk from the Berke­ley Haas, Haas School of Busi­ness to present her re­search pa­per.
Per­sonal Webpage

Pa­per

Ar­ti­fi­cial In­tel­li­gence, Firm Growth, and In­dustry Con­cen­tra­tion

Which firms in­vest in ar­ti­fi­cial in­tel­li­gence (AI) tech­no­lo­gies, and how do these in­vest­ments af­fect in­di­vidual firms and in­dus­tries? We provide a com­pre­hens­ive pic­ture of the use of AI tech­no­lo­gies and their im­pact among US firms over the last dec­ade, us­ing a unique com­bin­a­tion of job post­ings and in­di­vidu­al-­level em­ploy­ment pro­files. We in­tro­duce a novel meas­ure of in­vest­ments in AI tech­no­lo­gies based on hu­man cap­ital and doc­u­ment that lar­ger firms with higher sales, markups, and cash hold­ings tend to in­vest more in AI. Firms that in­vest in AI ex­per­i­ence faster growth in both sales and em­ploy­ment, which trans­lates into ana­log­ous growth at the in­dustry level. The pos­it­ive ef­fects are con­cen­trated among the ex ante largest firms, lead­ing to a pos­it­ive cor­rel­a­tion between AI in­vest­ments and an in­crease in in­dustry con­cen­tra­tion. However, the in­crease in con­cen­tra­tion is not ac­com­pan­ied by either in­creased markups or in­creased pro­ductiv­ity. In­stead, firms tend to ex­pand into new pro­duct and geo­graphic mar­kets. Our res­ults are ro­bust to in­stru­ment­ing firm­-­level AI in­vest­ments with for­eign in­dustry-­level AI in­vest­ments and with local vari­ation in in­dustry-­level AI in­vest­ments, and to con­trolling for in­vest­ments in gen­eral in­form­a­tion tech­no­logy and ro­bot­ics. We also doc­u­ment con­sist­ent pat­terns across meas­ures of AI us­ing firms’ de­mand for AI tal­ent (job post­ings) and ac­tual AI tal­ent (re­sumes). Over­all, our find­ings sup­port the view that new tech­no­lo­gies, such as AI, in­crease the scale of the most pro­duct­ive firms and con­trib­ute to the rise of su­per­star firms.



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