Digital Skill Premium in the UK Energy Sector

This paper uses novel job vacancy data for the UK and examines how the demand for digital skills is reflected in posted wages in the energy sector. We create a skill classification for digital skills using a supervised machine learning technique, e.g., the XGBoost classifier. We examine job vacancies requiring digital skills to determine if there is a digital skill premium, controlling for vacancy characteristics, non-digital skills, and labour market conditions. Our findings indicate that a marginal increase in the number of digital skills listed in job vacancies is associated with 1.5% (1.0%) increase in wages across (within) occupations. The demand for an additional advanced (intermediate) digital skill leads to a digital skill premium of 2.2% (2.1%) across occupations and 1.6% (1.4%) within occupations. Job vacancies that exclusively require advanced (intermediate) digital skills show an 8.4% (4.5%) higher wage than vacancies without digital skills. In contrast, vacancies requiring predominantly basic digital skills face wage penalties.