The Economics of AI-Enabled Education: Human Capital Formation, Productivity, and Inclusive Economic Growth

Artificial intelligence is rapidly transforming education globally, yet the economic consequences of AI-enabled education remain insufficiently understood. Existing research has largely examined AI in relation to learning outcomes and instructional efficiency, with limited attention to its implications for human capital formation, productivity, and inclusive economic growth. This study develops and empirically examines a framework linking AI-enabled education with economic outcomes through the formation of human capital and the development of labour-market-relevant skills. Using OECD country-level panel data for 38 countries over the period 2015-2025 (N = 350 country-year observations), we construct a composite AI-Enabled Education Index (AIEI) using Principal Component Analysis. The index incorporates indicators of digital educational infrastructure, AI skills, educational technology adoption, teacher digital competence, and AI-related educational policies. We employ two-way fixed effects estimation with country and year fixed effects, mediation analysis, and robustness tests including system GMM and instrumental variables. The AIEI demonstrates a significant positive association with human capital formation (β = 0.28, p < 0.001). Human capital mediates the relationship between AI-enabled education and labour productivity, with the indirect effect accounting for 45.5% of the total effect (Sobel Z = 4.82, p < 0.001). AI-enabled education is also positively associated with inclusive economic growth (β = 0.28, p < 0.001). Heterogeneity analysis reveals that effects are larger in countries with higher digital infrastructure (difference = 0.20, p < 0.001) and stronger institutional quality (difference = 0.20, p < 0.001). AI-enabled education contributes to human capital formation, productivity, and inclusive economic growth, with human capital serving as a key mediating mechanism. Investments in digital infrastructure, teacher development, and institutional quality amplify these benefits. The findings provide evidence for policy interventions that leverage AI to enhance educational and economic outcomes.