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on Business Economics |
| By: | Klaus Friesenbichler; Agnes Kügler |
| Abstract: | We study the short- and medium-term extensive and intensive margins of intangible investments in firm growth processes. The intensive and extensive margins of investment are both highly skewed and differ across sectors. Less productive firms are less likely to invest in intangibles, while incorporated firms are more likely to do so. Intangible capital only complements physical capital for a limited number of firms. Intangible investment is positively associated with short-term productivity growth, particularly among firms that consistently invest over time. The medium-term effects on productivity are limited and are largely confined to top-performing firms. We find systematic short-term effects of intangible investment on employment growth. Regular investment patterns correlate with higher employment growth over both time horizons. These results challenge the conventional assumption that intangible capital uniformly enhances firm performance. They also highlight the importance of sustained investment behavior and sectoral context. |
| Keywords: | intangible capital, employment, productivity, investment, firm growth, sample selection, Austria, microdata |
| Date: | 2025–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:wfo:wpaper:y:2025:i:711 |
| By: | Bryson, Alex (University College London); Tanaka, Mari (University of Tokyo) |
| Abstract: | The effects of trade unions on firm performance are theoretically ambiguous. The sizable empirical literature on their effects is almost exclusively confined to developed countries, particularly those in North America and Europe. We contribute to the literature by estimating union effects on firm performance in about 40, 000 firms in 77 developing countries between 2002 and 2011. In doing so, we exploit standardized firm level data collected by the World Bank. We find positive partial correlations between unionization and firm labor productivity and wages, especially in lower-income countries. These positive effects persist when we instrument for union presence, consistent with recent evidence of union positive effects on productivity and wages in western industrialized countries. |
| Keywords: | enterprise data, developing countries, wages, productivity, trade unions, union formation |
| JEL: | J51 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18128 |
| By: | Michael Kilumelume; Justice Tei Mensah; Aimable Nsabimana; Kunal Sen |
| Abstract: | We examine the effects of automation on firm performance and the labour market in the context of an emerging economy. To do this, we leverage unique administrative data on the universe of manufacturing firms in South Africa to identify causal evidence of firm-level outcomes from automation adoption. In the event-study design, we derive direct effects of automation on automating firms, the spillover effects on non-automating firms, and employment within the industry and location. |
| Keywords: | Firms, Automation, Labour market, South Africa |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-61 |
| By: | Catalina Amuedo-Dorantes (Department of Economics, University of California, Merced); Esther Arenas-Arroyo (Department of Economics, Vienna University of Economics and Business); Parag Mahajan (Department of Economics, University of Delaware); Bernhard Schmidpeter (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | How do migrant workers impact firm performance? We exploit an unexpected Change in firms’ likelihood of securing low-wage workers through the U.S. H-2B visa program to address this question. Using comprehensive administrative data, we find that access to H-2B workers raises firms’ annual revenues and survival likelihood. We do not find evidence of crowding out of non-H-2B workers or negative spillover effects on competitor firms. Our results support the notion that formal guest worker programs can mitigate labor shortages while limiting harm to incumbent workers. |
| Keywords: | guest workers, migrants, employment, firm dynamics, H-2B visa |
| JEL: | J23 F22 J61 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp384 |
| By: | Minni, Virginia (University of Chicago Booth School of Business) |
| Abstract: | Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200, 000 white-collar workers and 30, 000 managers over 10 years in 100 countries. I identify good managers by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers’ career progression and productivity. My results imply that the visible hands of managers match workers’ specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers’ time at the firm. |
| Keywords: | worker productivity, career trajectories, internal labor markets, managers |
| JEL: | J24 M5 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18137 |
| By: | Celiku, Bledi; Ubfal, Diego Javier; Valdivia, Martin |
| Abstract: | This paper estimates the gender gap in the performance of firms in Peru using representative data on both formal and informal firms. On average, informal female-led firms have lower sales, labor productivity, and profits compared to their male-led counterparts, with differences more pronounced when controlling for observable determinants of firm performance. However, gender gaps are only significant at the bottom of the performance distribution of informal firms, and these gaps disappear at the top of the distribution of informal firms and for formal firms. Possible explanations for the performance gaps at the bottom of the distribution include the higher likelihood of small, female-led firms being home-based, which is linked to lower profits, and their concentration in less profitable sectors. The paper provides suggestive evidence that household responsibilities play a key role in explaining the gender gap in firm performance among informal firms. Therefore, policies that promote access to care services or foster a more equal distribution of household activities may reduce gender productivity gaps and allow for a more efficient allocation of resources. |
| Date: | 2025–09–23 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:111218 |
| By: | Margaret S. McMillan; Hundanol A. Kebede |
| Abstract: | When estimating a production function, economists usually assume that firms fully employ all their available inputs. Contrary to this assumption, we document that underemployment of quasi-fixed inputs or low capacity utilization rates (CUR) is common across firms, especially in poor countries. Low CURs are correlated with supply-side constraints such as shortages of material inputs and electricity; they are also correlated with demand-side constraints such as a lack of access to markets. We show that when firms underemploy their quasi-fixed inputs, the assumptions behind standard production function estimation techniques-such as the control function approach-are invalid, and these techniques produce biased estimates of TFP. We demonstrate this using unique panel data from Ethiopia with information on actual and full capacity input demand. We find that measures of TFP that do not account for CUR considerably underestimate ’true’ productivity when CUR is low but not when CUR is high. This leads to an exaggeration of the TFP gap between rich and poor countries. |
| JEL: | O14 O40 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34279 |
| By: | Tuuli Paukkeri (VATT Institute for Economic Research); Terhi Ravaska (Tampere University) |
| Abstract: | We present new evidence that privately held firms are used to transfer income to underage children. This exacerbates wealth and income inequality among children and persists at least into early adulthood. Underage children at the top 1% of the parental income distribution are 20 times more likely to be owners of a privately held firm compared to children in the bottom 90%. The average age of these underage firm owners is 12 years, with ownership occurring across all ages from 0 to 17. Tracking data across generations shows that nearly half of these underage children come from non-entrepreneurial family backgrounds. |
| Keywords: | privately held firms, income inequality, income mobility, family business, dynastic wealth |
| JEL: | D3 H2 H3 M1 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:35 |
| By: | Martins, Ana (Technical University of Lisbon); Pereira dos Santos, João (ISEG); Pozzobon, Fernando (Universidade Técnica de Lisboa) |
| Abstract: | We estimate the causal effect of APOIAR, a targeted COVID-19 support initiative, on firm survival and performance. Using sharp and fuzzy regression discontinuity designs and three administrative datasets, we find that eligible firms experienced a short-term profitability increase in 2021, with €1 of support raising net income by €0.658. These effects did not persist into 2022, and we observe no significant changes in turnover or cost reduction, suggesting the profitability gains were mechanically driven by the subsidy. The funds were particularly used by ex-ante less productive, more indebted firms with limited liquidity |
| Keywords: | times of crisis, small private firms, grants |
| JEL: | H25 H32 D22 L20 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18136 |
| By: | Masayuki MORIKAWA |
| Abstract: | This study uses panel data on Japanese firms to examine trends in the shift of manufacturing firms toward service-oriented activities—referred to as “Manufacturing X.†A distinguishing feature of this study is its analysis not only of overall non-manufacturing activities but also of narrowly defined service activities. The main findings are as follows. First, the share of non-manufacturing activities within manufacturing firms has been steadily increasing. If the current trend continues, the share of non-manufacturing sales among these firms is projected to reach 16.5% by 2040. Second, both the proportion of firms engaged in, and the sales share of services such as machine repair, professional services, and business services are rising, indicating a gradual shift toward narrowly defined services. Third, the share of employees working in service and information service sectors within manufacturing firms is also increasing, reflecting servitization in terms of labor input. Fourth, while the expansion of narrowly-defined service sales is positively associated with sales growth and profit margins, the servitization of labor composition appears to have little impact on firm performance, suggesting instead the importance of headquarters functions. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:25022 |
| By: | Christopher Goetz; Henry Hyatt; Zachary Kroff; Kristin Sandusky; Martha Stinson |
| Abstract: | Entrepreneurs are known to be key drivers of economic growth, and the rise of online platforms and the broader “gig economy” has led self-employment to surge in recent decades. Yet the young and small businesses associated with this activity are often absent from economic data. In this paper, we explore a novel longitudinal dataset that covers the owners of tens of millions of the smallest businesses: those without employees. We produce three new sets of statistics on the rapidly growing set of nonemployer businesses. First, we measure transitions between self-employment and wage and salary jobs. Second, we describe nonemployer business entry and exit, as well as transitions between legal form (e.g., sole proprietorship to S corporation). Finally, we link owners to their nonemployer businesses and examine the dynamics of business ownership. |
| Keywords: | entrepreneurship, nonemployer business, dynamics, reallocation, business income |
| JEL: | L26 J63 J21 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-60 |
| By: | Razan Amine; Qianqian Zhang; Shushanik Hakobyan; Ankita Goel |
| Abstract: | This paper analyzes the major bottlenecks to private sector development in sub-Saharan Africa using novel methods based on firm-level data. Employing both perception-based and proxy-based methodologies, we identify and measure seven key obstacles to development. Our findings reveal significant divergences between firms' perceptions and objective measures of business constraints. While firms frequently cite infrastructure deficiencies as their primary concern, our proxy-based analysis identifies corruption followed by financial constraints as the most severe impediments to firm growth. Furthermore, small and medium-sized enterprises face disproportionate challenges compared to large firms, especially regarding financial access and human capital limitations. These findings underscore the need for targeted, context-specific policy interventions that address the objective constraints facing different types of firms across diverse economic environments in sub-Saharan Africa. |
| Keywords: | Sub-Saharan Africa; private sector development; firm-level data; principal component analysis |
| Date: | 2025–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/188 |
| By: | Lin William Cong; Yao Lu; Hanqing Shi; Wu Zhu |
| Abstract: | We study how exposure to automation affects the nature and level of corporate innovation, which informs how innovation begets innovation. We document that firms with high robot exposure alter their technological focus over time and shift innovative activities towards AI which automation naturally complements through data accumulation. The shift is more pronounced for firms with greater data generation or prior AI-related research experience. Because AI patents are more costly (e.g., in labor input), albeit more general and original, firms with high automation experience a significant rise in R&D expenditure but an initial drop in patent quantity, before benefiting—an innovation “J-Curve.” Our findings not only resolve the puzzle that globally firms invent less despite the greater research effort amidst rising automation, but also provides insights on the heterogeneous paths of innovation, all of which we rationalize in a parsimonious dynamic equilibrium model. |
| JEL: | G30 O36 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34240 |
| By: | Cirera, Xavier; Cruz, Marcio; Soares Martins Neto, Antonio |
| Abstract: | This paper investigates the impact of higher education expansion on firm performance in developing countries. It focuses on the significant expansion of higher education in Brazil between 2000 and 2012, which substantially increased higher education enrollment and graduation rates, thereby reducing the costs of hiring college-educated workers. Building on the theory of knowledge-based hierarchies and using a difference-in-differences approach and matching techniques, the paper finds that the surge in skilled labor supply led to a rise in the proportion of college-educated workers within firms in the treated microregions. This increase was accompanied by an increased prob-ability of firms adding knowledge hierarchies, followed by a rise in productivity and an increased likelihood of export. The findings suggest that policies affecting the cost and accessibility of hiring professionals and managers can significantly influence firms’ organizational structures, with implications for firm performance and productivity. |
| Date: | 2025–09–17 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11216 |
| By: | Jens Friedmann; Britta Glennon; Exequiel Hernandez |
| Abstract: | We examine how firms respond to talent scarcity caused by restrictive immigration policies. We argue that when firms cannot build capabilities internally through hiring, they alter their boundaries by engaging in corporate acquisitions to make up for the foregone talent and capabilities. Using data on 3, 861 U.S. firms and their use of the H-1B visa program (2001-2020), we leverage two exogenous shocks—the 2004 H-1B cap reduction and the 2007-2008 visa lottery—and find causal evidence that firms make more acquisitions as their exposure to immigration restrictions rises. This effect is stronger for deals with purposes related to the skills of the foregone talent, for small acquisitions, for domestic targets, and for targets in places with higher concentrations of skilled workers. |
| JEL: | F22 G34 J24 J61 L2 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34248 |
| By: | Chauvin, Juan Pablo; Chauvin, Jasmina; Chaves, Giovanna |
| Abstract: | We study the causal effect of reducing distance-related frictions with headquarters on branch outcomes in multi-unit firms in Brazil. Exploiting the introduction of new airline routes, we compare branches that gain a direct flight to their headquarters with otherwise similar branches in the same location that do not. In contrast to prior findings from high-income country settings, improved connectivity with headquarters lowers 12-month survival and, conditional on survival, reduces service and production employment. To interpret these results, we develop a model with three distance-dependent frictions: i) internal coordination costs of delivering headquarters inputs to branches, ii) client-service costs when serving markets without a local branch, and iii) a moral-hazard friction whereby distance amplifies local managers' incentives to over-hire. Consistent with the model's predictions, survival declines are larger at closer branches, while employment reductions are concentrated at more distant branches and in firms with lower headquarters bandwidth. The model clarifies how the impact of reduced frictions with headquarters depends on pre-existing distortions and reconciles heterogeneous connectivity effects observed across developing- and high-income contexts. |
| JEL: | D21 D22 D24 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14268 |
| By: | Samuel Kortum (Yale University); Bernardo S.C. Ribeiro (Einaudi Institute for Economics and Finance) |
| Abstract: | We explore how connections between buyers and suppliers of intermediate inputs evolve over time to promote firm growth. To formalize this process we develop a dynamic model of a granular endogenous production network, making stark assumptions that yield a tractable parsimonious framework. In the model, producers gradually build up a network of contacts by meeting other producers and source an intermediate input from their cheapest contact at any moment. They retain full recall, so can always switch to a producer contacted previously, even if they never bought from it before. Through this process the production network itself becomes an endogenous state variable in the model that drives firm growth. Despite its simplicity, the implications we derive from this framework are realistic enough to test against numerous findings from the burgeoning empirical literature on firm-to-firm trade. |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2459 |
| By: | Anaya Longaric, Pablo; Kostakis, Vasileios; Parisi, Laura; Vinci, Francesca |
| Abstract: | Europe’s lack of energy independence raises concerns about its vulnerability to external energy shocks, such as Russia’s 2022 invasion of Ukraine. This paper examines how energy shocks impact firm-level investment, comparing European and US firm responses. Using global oil supply news shocks, S&P’s Compustat data, and a local projections approach, the study reveals that European firms significantly cut capital and R&D expenditures after an oil shock, unlike US firms. The disparity is primarily driven by financially constrained firms in energy-intensive sectors. Additionally, differences in capital market structures play a role, as European firms relying more on market-based financing reduce investment by less. Lastly, our analysis confirms that the US shale revolution was a contributing factor in shaping Europe’s relative vulnerability. These findings highlight the need for national and EU policies to securethe energy supply, lower prices, and deepen capital markets, enhancing resilience and future competitiveness amid energy volatility. JEL Classification: D22, E22, F15, Q43 |
| Keywords: | competitiveness, corporate investment, energy, oil shocks |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253116 |
| By: | Kuosmanen, Natalia; Kuosmanen, Timo; Pajarinen, Mika |
| Abstract: | Abstract Microeconomic theory posits that in competitive markets, wages are determined by the marginal revenue product of labor. This study empirically tests this theoretical prediction using comprehensive firm-level register data from Finland’s manufacturing and service industries in years 2000–2022. We estimate the marginal products of labor based on production functions estimated using both parametric and nonparametric methods, including convex expectile regression and its control function extension. We then compare the estimated marginal products with estimated marginal costs of labor. The estimated marginal products systematically exceed the marginal costs in all industries, which suggests that most Finnish firms are understaffed, employing less than profit-maximization in a competitive market would require. We find that marginal products are most closely aligned with marginal costs in traditional service sectors. In contrast, the marginal products exceed the marginal costs most notably in capital and knowledge-intensive manufacturing industries, such as pharmaceuticals, metal industries, and information services. Our findings reveal persistent and heterogeneous wage-productivity gaps in Finland despite the fact that Finland has strong unions and labor market institutions. |
| Keywords: | Convex expectile regression, Labor compensation, Wage-productivity gap, Marginal product of labor, Manufacturing, Service industries, Finland |
| JEL: | D24 J31 L60 L80 |
| Date: | 2025–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:133 |
| By: | Byker, Tanya (Middlebury College); Malik, Sara (University of Utah); Patel, Elena (University of Utah); Sandvik, Jason (University of Arizona) |
| Abstract: | We use administrative data from the U.S. Census to estimate the effect of female director representation on workplace gender diversity and women’s earnings. Using a difference-in-differences estimator that correctly accounts for variation in treatment timing, we show that first-time female director appointments lead to subsequent increases in workplace gender diversity. We find that the effects are driven by the improved retention of female workers in the middle and upper quartiles of the firm’s overall earnings distribution. We find suggestive evidence that the effects are due to the newly appointed female directors’ influence on corporate policy, as we observe stronger effects when the director is placed on one of the board’s three core committees. |
| Keywords: | wage, directors, corporate board, women, committee |
| JEL: | J13 J30 J31 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18125 |
| By: | Richard B. Freeman; Huanan Xu |
| Abstract: | This paper examines the impact of working for an ESOP firm and Working-From-Home (WFH) on job satisfaction in the National Longitudinal Survey of Youth 1997 (NLSY97) and the General Social Science (GSS) survey. It finds that job satisfaction is higher for employees in ESOPs than for observationally similar workers in non-ESOP firms and for WFH workers than for their non-WFH peers. Fixed effect analysis of the NLSY97 finds that both ESOP and WFH employment raise job satisfaction for the same worker when he/she changes work status. The channels through which the two conditions raise satisfaction appear to differ: ESOPs raise satisfaction by increasing worker participation on collective workplace or firm decisions while WFH raise satisfaction by increasing worker flexibility in their individual work activity. Both participation and flexibility also raise job satisfaction independently. The data further show ESOPs had more extensive WFH than non-ESOP firms during the Covid-19 pandemic. |
| JEL: | J28 J54 J81 M54 P1 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34231 |
| By: | Subhasish Dugar (Department of Economics, University of Utah); Kenju Kamei (Faculty of Economics, Keio University) |
| Abstract: | Performance pay raises productivity but can also trigger costly peer dynamics, which can influence workers’ preferences over pay schemes. We test whether sabotage risk drives compensation choices using a field experiment with Indian vegetable packers. Workers first perform under exogenously assigned tournaments that differ only in pay inequality but are equivalent in total payout, then choose between them, enabling endogenous sorting. Under impartial expert evaluation, workers select steeper tournaments, indicating no aversion to inequality or competition. Under peer evaluation, sabotage escalates sharply with pay dispersion, prompting workers to preemptively prefer more equitable schemes. Our study expands the literature on labor market sorting by identifying sabotage risk as a fundamental driver of sorting and shows how destructive peer dynamics can rationalize compressed wage structures in practice. |
| Keywords: | Field experiment, Pay equity, Tournament, Sabotage, Sorting. |
| JEL: | C93 J31 M52 D81 |
| Date: | 2025–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2025-020 |
| By: | Djankov, Simeon; Melcarne, Alessandro; Ramello, Giovanni B.; Spruk, Rok |
| Abstract: | We investigate how timeliness in enforcing legal contracts affects economic growth across countries. We focus on judicial timeliness as a proxy for courts’ performance in a large panel of 169 countries over the 2004–2019 period. We show that, by raising uncertainty and promoting opportunistic behaviors in business transactions, slower courts hinder economic development. The relationship is robust to diverse model specifications and appears stronger for business environments more heavily relying on judiciaries such as economies undergoing rapid growth, countries characterized by low human capital and civil law jurisdictions. |
| Keywords: | economic growth; institutions; judicial timeliness |
| JEL: | K41 H40 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129551 |
| By: | Jaedo Choi; George Cui; Younghun Shim; Yongseok Shin |
| Abstract: | US multinationals formed joint ventures in China for market access and lower labor costs. However, these ventures transfer technology to Chinese firms, fueling future competition. While individual firms weigh the risks to their own profits, they disregard the negative impact on other US firms and the broader economy, resulting in an over-investment that may reduce the US welfare. In our empirical analysis, industries with more joint ventures in China show positive spillovers to Chinese firms but negative outcomes for firms in the US. We develop a two-country model with oligopolistic competition, innovation, and joint ventures. For the US, the short-run gains from joint ventures are outweighed by long-run losses due to rising Chinese competition. Joint ventures benefit large US firms at the expense of small firms and the real wages of workers. A ban on joint ventures since 1999 would have boosted US welfare by 1.2 percent. |
| JEL: | F23 O25 O33 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34284 |
| By: | Kristian Behrens; Yasusada Murata |
| Abstract: | We characterize the family of utility functions satisfying linear fractional relative risk aversion (LFRRA) in terms of the Gauss hypergeometric functions. We apply this family, which nests various utility functions used in different strands of literature, to monopolistic competition and obtain a closed-form solution for the profit-maximizing price by generalizing the Lambert W function. We let firm-level data decide whether the RRA in each sector or in the aggregate economy is increasing, decreasing, or constant, which in turn determines whether markups are decreasing, increasing, or constant with respect to marginal costs. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.09865 |
| By: | Aaron Chatterji; Thomas Cunningham; David J. Deming; Zoe Hitzig; Christopher Ong; Carl Yan Shan; Kevin Wadman |
| Abstract: | Despite the rapid adoption of LLM chatbots, little is known about how they are used. We document the growth of ChatGPT’s consumer product from its launch in November 2022 through July 2025, when it had been adopted by around 10% of the world’s adult population. Early adopters were disproportionately male but the gender gap has narrowed dramatically, and we find higher growth rates in lower-income countries. Using a privacy-preserving automated pipeline, we classify usage patterns within a representative sample of ChatGPT conversations. We find steady growth in work-related messages but even faster growth in non-work-related messages, which have grown from 53% to more than 70% of all usage. Work usage is more common for educated users in highly-paid professional occupations. We classify messages by conversation topic and find that “Practical Guidance, ” “Seeking Information, ” and “Writing” are the three most common topics and collectively account for nearly 80% of all conversations. Writing dominates work-related tasks, highlighting chatbots’ unique ability to generate digital outputs compared to traditional search engines. Computer programming and self-expression both represent relatively small shares of use. Overall, we find that ChatGPT provides economic value through decision support, which is especially important in knowledge-intensive jobs. |
| JEL: | J01 O3 O4 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34255 |