Paolo Carioli (KU Leuven)

Evidence on the Adoption of Artificial Intelligence: the Role of Skills Shortage in German Firms

Abstract. Artificial Intelligence (AI) is considered to be the next general-purpose technology, with the potential of performing tasks commonly requiring human capabilities. While it is commonly feared that AI replaces labor and disrupts jobs, we instead investigate the potential of AI for overcoming increasingly alarming skills shortages in firms. We exploit unique data from the German part of the Community Innovation Survey on both the adoption of AI and the extent to which firms experience scarcity of skills. We measure skills shortage by the number of job vacancies that could not be filled as planned by firms, distinguishing among different types of skills. We find a positive and significant effect of skills shortage on AI adoption, the breadth of AI methods, and the breadth of areas of application of AI. In addition, our results suggest that scarcity of labor with academic education relates to firms exploring and adopting AI.