Widening or closing the gap? The relationship between artificial intelligence, firm-level productivity and regional clusters

Artificial intelligence (AI) is seen as a key technology for economic growth. However, the impact of AI on firm productivity has been under researched – particularly through the lens of inequality and clusters. Based on a unique sample of German firms, filling at least one patent between 2013 and 2019, we find evidence for a positive influence of AI on firm productivity. Moreover, our analysis shows that while AI knowledge does not contribute to productivity divergences in general, it increases the productivity gap between laggard and all other firms. Nevertheless, this effect is reduced through the localisation in clusters.