Tools: Latest How AI Is Affecting Productivity And Jobs In Europe 2026
Artificial intelligence promises to reshape economies worldwide, but firm-level evidence on its effects in Europe remains scarce. This column uses survey data to examine how AI adoption affects productivity and employment across more than 12,000 European firms. The authors find that AI adoption increases labour productivity levels by 4% on average in the EU, with no evidence of reduced employment in the short run. The productivity benefits, however, are unevenly distributed. Medium and large firms, as well as firms that have the capacity to integrate AI through investments in intangible assets and human capital, experience substantially stronger productivity gains.
Europe faces a critical choice in the race for artificial intelligence (AI). As the technology promises to reshape economies worldwide, policymakers are caught between two competing narratives. Optimists envision AI as the catalyst for a new productivity boom, potentially adding several percentage points to annual growth (Baily et al. 2023). Sceptics warn that adoption barriers, skill gaps, and uneven diffusion may limit gains and exacerbate inequality (Acemoglu 2024, Filippucci et al. 2024, Gambacorta and Shreeti, 2025). For Europe, the stakes are particularly high: while the continent boasts world-leading AI researchers and industrial capacity, it lags behind the US and China in developing new AI technologies (Cornelli et al. 2023). Recent studies suggest that AI could widen cross-country income gaps, with benefits concentrating in advanced economies that are better prepared to adopt and integrate these technologies (Cazzaniga et al. 2024, Gambacorta et al. 2025, Hennig and Khan 2025).
Yet robust firm-level evidence on AI’s actual effects in Europe remains scarce. Do European firms that adopt AI genuinely become more productive? Does AI destroy jobs or augment workers? Are the benefits shared broadly, or do they concentrate among larger, better-resourced companies? In a recent study (Aldasoro et al. 2026), we provide the first causal evidence on how AI adoption affects productivity and employment across more than 12,000 European firms.
Europe’s position in the global AI landscape is paradoxical. On various innovation metrics, the continent falls behind. The EU trails the US not only in the absolute number of AI-related patents but also in AI specialisation – the share of AI patents relative to total patents. This innovation gap translates into differences in firms’ readiness to adopt AI, as
Source: HackerNews
