AI and Productivity in Europe
IMF Working Papers, April 4, 2025
Source details
- Canonical URL
- AI and Productivity in Europe
Other formats
Bibliographic details
- Authors: Florian Misch, Ben Park, Carlo Pizzinelli, Galen Sher
- Published: April 4, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229006057.001
Summary findings
- The study simulates the medium-term impact of AI adoption on total factor productivity for 31 European countries.
- Medium-term productivity gains for Europe as a whole are likely to be modest, at around 1 percent cumulatively over five years.
- These gains are larger than estimates by Acemoglu (2024) for the US.
- Gains vary widely across scenarios and countries and are substantially larger in countries with higher incomes.
- National and EU regulations around occupation-level requirements, AI safety, and data privacy combined could reduce Europe’s productivity gains by over 30 percent if AI exposure were 50 percent lower in tasks, occupations and sectors affected by regulation.
Methodology and scenarios
- Uses the Acemoglu (2024) approach to simulate AI adoption effects on total factor productivity.
- Compiles many scenarios by:
- Pooling evidence on which tasks will be automatable in the near term.
- Using reduced-form regressions to predict AI adoption across Europe.
- Considering relevant regulation that restricts AI use heterogeneously across tasks, occupations and sectors.
Key statistics and quantitative points
- Number of countries analyzed: 31 European countries.
- Projected cumulative productivity gain for Europe: around 1 percent over five years.
- Potential reduction in productivity gains due to regulation: over 30 percent under the scenario where AI exposure is 50 percent lower in affected tasks, occupations and sectors.
- Publication date: April 4, 2025.
- Pages: 38.
- Volume: 2025.
- Issue: 067.
- Series: Working Paper No. 2025/067.
- DOI: https://doi.org/10.5089/9798229006057.001.
- ISBN: 9798229006057.
- ISSN: 1018-5941.
Policy implications and considerations
- Heterogeneous regulation across tasks, occupations, and sectors materially affects realized productivity gains from AI adoption.
- Occupation-level requirements, AI safety rules, and data privacy regulations can combine to substantially lower AI exposure and hence reduce productivity benefits.
- Policy design should account for distributional differences across countries and income levels, given larger gains in higher-income countries.
IMF Working Paper — "AI and Productivity in Europe" by Florian Misch, Ben Park, Carlo Pizzinelli, and Galen Sher, April 4, 2025.
Content in this bundle
- Working Paper