Looking in the rear-view mirror: evidence from artificial intelligence investment, labour market conditions and firm growth
Looking in the rear-view mirror: evidence from artificial intelligence investment, labour market conditions and firm growth
This paper presents evidence of the impact of AI investment on firm growth and how the relationship is sensitive to labour market conditions. Using the generalised method of moments (GMM) estimation on 1,950 unique American firms over 1996-2016, we show that a 10% increase in AI investment leads to an increase in firm growth by 0.04%. However, this result is highly sensitive to labour market conditions, as labour productivity can positively impact firm growth, but labour cost and labour share negatively influence firm growth. These results offer original insights into an essential channel via which investment in AI may mediate firm growth.
Artificial Intelligence,, Labour Market Conditions,, Labour Cost,, Labour Share,, Labour Productivity,, Firms Growth,, Institutional Quality
Tingbani, Ishmael
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Salia, Samuel
05cdade3-650f-4c27-a0e8-544c0af698d5
Hartwell, Christopher A.
18e77119-005f-49f5-834a-d7e2491c3207
Yahaya, Alhassan
d59eedbc-9953-47bd-8172-ea7055c15d07
Tingbani, Ishmael
e6b2741a-d792-4adf-84cc-a2f64d5545ca
Salia, Samuel
05cdade3-650f-4c27-a0e8-544c0af698d5
Hartwell, Christopher A.
18e77119-005f-49f5-834a-d7e2491c3207
Yahaya, Alhassan
d59eedbc-9953-47bd-8172-ea7055c15d07
Tingbani, Ishmael, Salia, Samuel, Hartwell, Christopher A. and Yahaya, Alhassan
(2024)
Looking in the rear-view mirror: evidence from artificial intelligence investment, labour market conditions and firm growth.
International Journal of Finance & Economics.
(In Press)
Abstract
This paper presents evidence of the impact of AI investment on firm growth and how the relationship is sensitive to labour market conditions. Using the generalised method of moments (GMM) estimation on 1,950 unique American firms over 1996-2016, we show that a 10% increase in AI investment leads to an increase in firm growth by 0.04%. However, this result is highly sensitive to labour market conditions, as labour productivity can positively impact firm growth, but labour cost and labour share negatively influence firm growth. These results offer original insights into an essential channel via which investment in AI may mediate firm growth.
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Accepted/In Press date: 20 January 2024
Keywords:
Artificial Intelligence,, Labour Market Conditions,, Labour Cost,, Labour Share,, Labour Productivity,, Firms Growth,, Institutional Quality
Identifiers
Local EPrints ID: 486516
URI: http://eprints.soton.ac.uk/id/eprint/486516
ISSN: 1076-9307
PURE UUID: 3257fe5c-b890-428c-aeab-388ae6e6dfac
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Date deposited: 24 Jan 2024 18:17
Last modified: 18 Mar 2024 03:58
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Contributors
Author:
Samuel Salia
Author:
Christopher A. Hartwell
Author:
Alhassan Yahaya
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