@LeelaTorres
Artificial Intelligence in the Firm:
Bottlenecks in Software Production
Fiona Chen James Stratton
Harvard University Harvard University
Job Market Paper
Current version: August 4, 2026
First version: January 7, 2026
Click here for current version
Abstract
We study the impacts of AI coding assistants and agents on software engineering work, using
a novel proprietary dataset from an engineering analytics platform, covering 300 million work
events — including GitHub coding activity, Jira issues, and Google Calendar events — across
718 firms. We use a staggered difference-in-differences design, exploiting variation in firm-
level adoption timing of AI coding assistants and agents. Both technologies increase coding
productivity. However, productivity gains do not fully pass through to changes in software output
or employment. For AI agents, this incomplete pass-through reflects a bottleneck from code
review: review times increase, a larger share of code updates require revisions, and reviews
involve more comments. We develop a model of software production to structure these results, in
which AI affects both productivity and quality of intermediate outputs, and in turn can generate
a review bottleneck and limit pass-through.