Working Paper: NBER ID: w24917
Authors: Erik Brynjolfsson; Xiang Hui; Meng Liu
Abstract: Artificial intelligence (AI) is surpassing human performance in a growing number of domains. However, there is limited evidence of its economic effects. Using data from a digital platform, we study a key application of AI: machine translation. We find that the introduction of a machine translation system has significantly increased international trade on this platform, increasing exports by 17.5%. Furthermore, heterogeneous treatment effects are all consistent with a substantial reduction in translation-related search costs. Our results provide causal evidence that language barriers significantly hinder trade and that AI has already begun to improve economic efficiency in at least one domain.
Keywords: machine translation; international trade; artificial intelligence; eBay; economic efficiency
JEL Codes: D8; F1; F14; O3; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| eBay's machine translation (EMT) (D44) | U.S. exports (F10) |
| eBay's machine translation (EMT) (D44) | differentiated products (L15) |
| eBay's machine translation (EMT) (D44) | cheaper products (D49) |
| eBay's machine translation (EMT) (D44) | listings with more words in titles (Y91) |
| eBay's machine translation (EMT) (D44) | inexperienced buyers (R21) |