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Working Paper
Mind the Gap: AI Adoption in Europe and the US
This paper combines international evidence from worker and firm surveys conducted in 2025 and 2026 to document large gaps in AI adoption, both between the US and Europe and across European countries. Cross-country differences in worker demographics and firm composition account for an important share of these gaps. AI adoption, within and across countries, is also closely linked to firm personnel management practices and whether firms actively encourage AI use by workers. Micro-level evidence suggests that AI generates meaningful time savings for many workers. At the macro level, in recent ...
Report
Labor Market Policies during an Epidemic
We study the positive and normative implications of labor market policies that counteract the economic fallout from containment measures during an epidemic. We incorporate a standard epidemiological model into an equilibrium search model of the labor market to compare unemployment insurance (UI) expansions and payroll subsidies. In isolation, payroll subsidies that preserve match capital and enable a swift economic recovery are preferred over a cost-equivalent UI expansion. When considered jointly, however, a cost-equivalent optimal mix allocates 20 percent of the budget to payroll subsidies ...
Journal Article
Post-Pandemic Labor Shortages Have Limited the Effect of Monetary Policy on the Labor Market
The labor market has so far shown remarkable resilience to the Federal Reserve’s recent monetary policy tightening. Severe labor shortages in the post-pandemic era have led many employers to hold on to workers and hire less-skilled workers—even though they expect demand for their goods or services to weaken in the future. As a result, unemployment remains low, and labor productivity has declined.
Report
How Much Did Labor Productivity Gains Offset the Inflationary Impact of the 2025 Tariffs?
In 2025, the average realized tariff on U.S. imports rose from about 2.5 percent to about 10 percent. The resulting increase in U.S. firms’ input costs had the potential to raise inflation significantly and explain why inflation remained significantly above the Federal Reserve’s 2 percent target last year. On the other hand, as the tariffs took hold, U.S. workers’ productivity grew, which could have helped companies reduce their costs and thereby mitigate inflationary pressures from the tariffs. To study the extent to which productivity gains may have offset the tariff-driven cost ...
Journal Article
A New U.S. Productivity Chapter? What Industry Data Say About AI
Since late 2022, U.S. labor productivity has risen notably above its pre-pandemic trend. Industry data suggest the pickup is not yet broad-based: A small set of industries accounts for most gains. While higher AI adoption is associated with faster productivity growth across industries, it explains little of the shift in aggregate contributions, suggesting AI adoption is still spreading.
Working Paper
The Rapid Adoption of Generative AI
Generative artificial intelligence (AI) is a potentially important new technology, but its impact on the economy depends on the speed and intensity of adoption. This paper reports results from a series of nationally representative U.S. surveys of generative AI use at work and at home. As of late 2024, 45% of the U.S. population age 18-64 uses generative AI. Among employed respondents, 27% used generative AI for work at least once in the previous week: 10% used it every workday, and 17% on some but not all workdays. Relative to each technology’s first mass-market product launch, work ...
The Rapid Adoption of Generative AI
An analysis suggests that generative AI has been quickly and widely adopted at home and in the workplace, with about 40% of the U.S. population ages 18 to 64 using it to some degree.
Mind the Gap: AI Adoption in Europe and the U.S.
AI adoption is much higher among American workers than it is among European workers. Is this widening the gap between U.S. and EU productivity growth?
Working Paper
Estimating Hysteresis Effects
In this paper, we identify demand shocks that can have a permanent effect on output through hysteresis effects. We call these shocks permanent demand shocks. They are found to be quantitatively important in the United States, in particular when the sample includes the Great Recession. Recessions driven by permanent demand shocks lead to a permanent decline in employment and investment, although output per worker is largely unaffected. We find strong evidence that hysteresis transmits through a rise in long-term unemployment and a decline in labor force participation and disproportionately ...
Journal Article
Labor Productivity in a Pandemic
U.S. labor productivity has grown quickly during the pandemic compared with the past decade. However, this rapid pace is unlikely to be sustained. Similar to the Great Recession, the primary reasons for strong productivity growth now are cyclical effects that are likely to unwind as the economy continues to recover. For example, the number of workers has fallen, so capital per worker has risen—raising labor productivity in the short term. What effect the pandemic itself might have on productivity remains uncertain.