Predictive AI and productivity growth dynamics: Evidence from French firms

While artificial intelligence (AI) adoption holds the potential to enhance business operations through improved forecasting and automation, its relation with average productivity growth remain highly heterogeneous across firms. This paper shifts the focus and investigates the impact of predictive 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 balancing AI users and other firms based on key observables. To propose a possible mechanisms underlying this relation, 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 association. Finally, we find that the AI-volatility link among “AI buyers” is mitigated in firms with a higher share of ICT engineers and technicians, suggesting that AI's successful integration requires complementary human capital.