AI as an Innovation in the Method of Innovation

Title: AI as an Innovation in the Method of Innovation: Implications for Productivity Growth in the US and Europe (Academic Seminar)
Speaker: Dr. Jonathan Haskel | Professor of Economics at Imperial Business School, Imperial College London
Date: Thursday, March 12, 2026
Time: 2:30 PM
Room: LH4096

Zoom Meeting Link: https://wilfrid-laurier.zoom.us/j/99823194355 pwd=hMA9EdFpP5q11pANWF7z40aIiKMUnv.1 
Meeting ID: 998 2319 4355
Zoom Meeting Passcode: 374091

SUMMARY

This paper estimates the possible AI contribution to future labor productivity growth assuming that AI is both a “general purpose technology” and an “innovation in the method of innovation.” The framework used in this paper separates an upstream innovation sector from a downstream production sector. The impact of AI is modelled as (a) boosting upstream total factor productivity (a “production effect”) and (b) enhancing intangible capital use downstream (a “use effect”). The framework can be used to show how AI’s boost to upstream total factor productivity growth can drive long-term labor productivity growth. We have two main findings. First, we argue that AI can already be seen in productivity statistics for the United States. The production and use effects of software and software R&D (alone) contributed (a) 50 percent of the 2 percent average rate of growth in US nonfarm business labor productivity from 2017 to 2024 and (a) 50 percent of its 1.2 percentage point acceleration relative to the pace from 2012 to 2017. Second, taking additional intangibles and data assets into account, we calculate a long-run contribution of AI to labor productivity growth based on assumptions that follow from the recent trajectories of investments in software, software R&D, other intangibles, and their contributions to growth in both US and Europe. Our central estimate is that AI will boost annual labor productivity growth by as much as 1 percentage point in the United States and about 0.3 percentage point in Europe.

BIOGRAPHY

Jonathan Haskel is Professor of Economics at Imperial College Business School, Imperial College London, where he has been since 2008. He has previously taught at Queen Mary, University of London, Tuck School of Business, Dartmouth College, USA and Stern School of Business, New York University, USA. His research interests are productivity and growth. He has published in academic journals and, with Stian Westlake, written two non-technical books, Capitalism Without Capital: the Rise of the Intangible Economy (Princeton, 2017) and Restarting the Future: How to Fix the Intangible Economy (Princeton, 2022). In addition to his academic activities, he has been an External Member of the Reporting Panel of the Competition and Markets Authority (2001-2009); a non-Executive Director of the UK Statistics Authority (2016-2022) and an External Member of the Bank of England Monetary Policy Committee (2018-2024).