"AI to Boost U.S. Productivity by 0.9% Annually Over Next Decade"... 'J-Curve' Growth Expected [American Economic Association 2026]

2026 Annual Meeting of the American Economic Association (ASSA)
Short-term Productivity Decline Expected Due to Initial Transition Costs

"Companies with a high level of artificial intelligence (AI) utilization experience a short-term productivity decline of about 1.3%, but after passing through the transition period, their revenue, employment, and productivity all improve," said Professor Christina McElheran of the University of Toronto.

"AI could increase the annual productivity growth rate in the United States by up to 0.9 percentage points over the next decade," said Matthias Schiff, an economist at the Organisation for Economic Co-operation and Development (OECD).

On the 3rd (local time), at the opening of the '2026 Annual Meeting of the American Economic Association (AEA)' in Philadelphia, Pennsylvania, USA, a wide range of discussions took place regarding the economic effects of AI. Participants generally agreed that while the initial introduction of AI may inevitably incur transitional costs, over time, there is a high likelihood of positive effects across the broader economy.

Matthias Schiff, Economist at the Organisation for Economic Co-operation and Development (OECD), is speaking at the 'Annual Meeting of the American Economic Association (ASSA) 2026' held on the 3rd (local time) in Philadelphia, Pennsylvania, USA. Photo by Haeyoung Kwon

Matthias Schiff, economist in the Structural Policy Division at the OECD, stated in the session "AI and Productivity: Is This Time Different?" that "AI could raise the annual productivity growth rate in the United States by about 0.3 to 0.9 percentage points over the next decade."

However, he explained, "The productivity effects of AI will not be the same across all industries," adding, "It is highly likely that the impact will be concentrated in office and knowledge services sectors." In particular, productivity improvements driven by AI are expected to be pronounced in knowledge-intensive service industries such as professional and technical services, legal services, and financial and insurance services, whereas the effects may be relatively limited in field-based industries such as forestry, fisheries, construction, or accommodation. Addressing concerns about the resulting gaps between industries and constraints on overall growth, Schiff noted, "While the effects of AI may be uneven, if the workforce is able to move between industries, the negative impact on overall productivity will not be significant."

On the other hand, research findings were also presented showing that productivity may actually decline in the early stages of AI adoption.

Professor Christina McElheran of the University of Toronto introduced research analyzing data from the U.S. manufacturing sector, stating, "Companies with a higher level of AI utilization experience a short-term productivity decline of about 1.3%." She explained that this short-term performance drop is "not due to the technology itself, but rather to costs arising from internal organizational transitions within companies." In reality, during the initial phase of AI adoption, shocks from the adaptation process-such as reductions in employment, increases in inventory, and the introduction of industrial robots-worsen short-term performance.

However, she made it clear that this adjustment phase is temporary. Professor McElheran emphasized, "Companies that endure this transition period subsequently see improvements in revenue, employment, and productivity," adding, "The effects of AI follow a J-curve pattern, with negative impacts in the early stages, but improvements over time."

Professor Christina McElheran of the University of Toronto spoke at the 'Annual Meeting of the American Economic Association (ASSA) 2026' held on the 3rd (local time) in Philadelphia, Pennsylvania, USA. Philadelphia=Photo by Kwon Haeyoung

Monetary authorities also acknowledged that AI could become a growth engine, but expressed caution regarding its effects on employment.

Anna Paulson, President of the Federal Reserve Bank of Philadelphia, commented, "We are witnessing the early phase of a step-up in productivity growth driven by AI and regulatory easing," and diagnosed, "Initial AI investments are currently concentrated in areas such as data centers, which do not require significant labor demand." She added, "Once AI is fully integrated across the economy, we may see a strong growth phase despite relatively limited job creation."

This statement reflects the view that while AI can be a key driver of economic growth, its effect on expanding employment may be limited.