The digital skill premium: Evidence from job vacancy data

Aida Garcia-Lazaro, Jorge Mendez-Astudillo, Susan Lattanzio, Charles Larkin and Linda Newnes

Economics Letters, 2025, vol. 250, issue C

Abstract: This paper examines the relationship between digital skills demand and posted wages in the UK using novel vacancy data. Digital skills — classified into basic, intermediate, and advanced using an XGBoost model — are linked to significant wage premiums. Within occupations, they are associated with 5.8% higher wages, with advanced and intermediate skills increasing wages by up to 8.9% when listed in job postings. Each additional digital skill increases wages by 1%, rising to 1.6% for advanced and intermediate skills. Artificial intelligence (AI) and cybersecurity skills yield particularly high returns, increasing wages by 8.6%–9.7% when listed and by 4.8%–5.4% per additional skill.

Keywords: Digital skill premium; AI; Cybersecurity; Posted wages; Xgboost (search for similar items in EconPapers)
JEL-codes: F16 J23 J24 O31 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:250:y:2025:i:c:s0165176525001314

DOI: 10.1016/j.econlet.2025.112294

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