Predictive AI and productivity growth dynamics: evidence from French firms

While artificial intelligence (AI) adoption holds the potential to enhance business operations through im provedforecastingandautomation, itsrelationwithaverageproductivitygrowthremainhighlyheterogeneous across firms. This paper shifts the focus and investigates the impact of predictive artificial intelligence (AI) on the volatility of firms’ productivity growth rates. Using firm-level data from the 2019 French ICT survey, we provide robust evidence that AI use is associated with increased volatility. This relationship persists across multiple robustness checks, including analyses addressing causality concerns. To propose a possible mech anisms underlying this effect, we compare firms that purchase AI from external providers (“AI buyers”) and those that develop AI in-house (“AI developers”). Our results show that heightened volatility is concentrated among AI buyers, whereas firms that develop AI internally experience no such effect. Finally, we find that AI inducedvolatility among “AIbuyers”ismitigatedinfirmswithahighershareofICTengineersandtechnicians, suggesting that AI’s successful integration requires complementary human capital.