The rapid evolution of artificial intelligence (AI), particularly generative AI, has sparked a spirited debate among economists and technologists regarding its implications for productivity growth and employment. While some voices predict moderate productivity gains coupled with significant job displacement, a closer examination of recent data and studies paints a more optimistic picture. AI has the potential to drive unprecedented growth and innovation, provided that policymakers and businesses implement strategies to address its challenges and harness its benefits.

AI’s impact on productivity can be understood through two distinct pathways: its ability to automate tasks in the production of goods and services, and its potential to revolutionize the creation of new ideas. Studies have begun to reveal the transformative effects of generative AI on individual productivity. For instance, Erik Brynjolfsson and his colleagues observed that customer service agents at a US software firm experienced a productivity increase of nearly 14% in the first month of using an AI assistant. Over the next three months, this stabilized at a level approximately 25% higher than their original productivity.

Another study mirrored these findings, highlighting substantial productivity gains across a diverse group of knowledge workers. Interestingly, the largest initial improvements were observed among lower-productivity workers, suggesting that AI could play a role in reducing inequality within firms.

Moving beyond individual-level gains, macroeconomic analyses have begun to quantify AI’s broader potential. In a 2024 paper, economists Philippe Aghion and Céline Bunel explored two methodologies to estimate AI’s impact on productivity........

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