The Digital Skill Premium: Evidence from job vacancy data

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

doi:10.1016/j.econlet.2025.112294

The Digital Skill Premium: Evidence from job vacancy data

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

Instituto de Investigaciones Economicas, UNAM

Research output: Contribution to journal › Article › peer-review

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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.

Original language	English
Article number	112294
Number of pages	4
Journal	Economics Letters
Volume	250
Early online date	25 Mar 2025
DOIs	https://doi.org/10.1016/j.econlet.2025.112294
Publication status	Published - 30 Apr 2025

Data Availability Statement

The authors do not have permission to share data.

Funding

This research has been undertaken as part of the Made Smarter Innovation: Centre for People-Led Digitalisation, at the University of Bath. The project is funded by the Engineering and Physical Sciences Research Council (EPSRC) Grant EP/V062042/1.

Funders	Funder number
University of Bath
Engineering and Physical Sciences Research Council	EP/V062042/1

Keywords

AI
Cybersecurity
Digital skill premium
Posted wages
Xgboost

ASJC Scopus subject areas

Finance
Economics and Econometrics

Access to Document

10.1016/j.econlet.2025.112294Licence: CC BY

Cite this

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title = "The Digital Skill Premium: Evidence from job vacancy data",

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.",

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AB - 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.

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The Digital Skill Premium: Evidence from job vacancy data

Abstract

Data Availability Statement

Funding

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Made Smarter Innovation - People-Led Digitalisation

Cite this

The Digital Skill Premium: Evidence from job vacancy data

Abstract

Data Availability Statement

Funding

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Projects

Made Smarter Innovation - People-Led Digitalisation

Cite this