KOF Research Seminar- Bettina PETERS: Unleashing Productivity: The Role of AI and Data-Driven Investments in Firm Performance

Abstract: Artificial intelligence (AI) has diffused rapidly across firms and is widely viewed as a general-purpose technology with the potential to raise productivity. The effective deployment of AI is often argued to depend on complementary investments in data, yet empirical evidence on the productivity effects of data remains scarce. This paper examines how AI adoption and data investments, both separately and jointly, affect firm-level productivity. Using firm-level panel data for German firms from 2018 to 2023, we find that AI adoption is associated with an average productivity increase of approximately 6%. This effect is robust across model specifications and stable over time. Beyond the stand-alone effect of AI, our analysis shows that data investments independently contribute to pro