Innovative research from the Oxford Internet Institute and the Center for Social Data Science at the University of Copenhagen has revealed the intricate relationship between skills, their complementarity, and economic value. The study, published in Research Policy, demonstrates that skills, especially in Artificial Intelligence (AI), command high economic value due to their versatility and synergy with other competencies. Based on data from over 25,000 workers and 962 skills, this groundbreaking research sheds light on how workers can strategically adapt to the evolving labor market.*
The power of skill complementarity
The study, titled “What is the Price of a Skill? The Value of Complementarity,” harnessed data from nearly 50,000 freelance projects on online labor platforms in the USA from 2014 to 2022. By analyzing completed projects, researchers constructed a comprehensive network of skills, quantifying their economic value in US dollars and revealing their interdependence.
One of the core findings is that a skill’s economic worth is closely tied to its complementarity with other skills. Essentially, the more a skill can be combined with other competencies, the higher its intrinsic value. For instance, skills like Data Analytics are highly valuable because they seamlessly integrate with other high-value skills, whereas more specialized skills like Photo Retouching have limited applicability and consequently lower economic value.
Adapting to shifting labor demands
In an era marked by technological advancements and changing labor demands, the study’s findings provide valuable insights for workers seeking to align their skills with the job market. As new technologies, especially AI, continue to reshape industries, the value of certain skills is greatly influenced. Among the most prized skills are programming languages and data science, which can boost workers’ earnings by an average of 21%.
Notably, the study identifies the top five AI skills that significantly increase hourly wages:
1. **Machine Learning** (+40%)
2. **Tensor Flow** (+38%)
3. **Deep Learning** (+27%)
4. **Natural Language Processing** (+19%)
5. **Data Science** (+17%)
Moreover, the research highlights the versatility of certain skills that offer high general-purpose value across various sectors. For example, proficiency in the programming language Python can result in an 8% wage increase, emphasizing its broad applicability.
Tailoring skills to background and industry
The study underscores the importance of considering a worker’s background when evaluating skills. Skills in Software and tech, for instance, are seven times more valuable for workers in Marketing and ten times as valuable for those in Finance and legal compared to individuals from a tech-oriented background. This observation reinforces that certain skills possess high general-purpose value and can serve as valuable assets in diverse industries.
Expert insights
Dr. Fabian Stephany, co-author of the study, commented on its significance: “We know we never apply skills in isolation. Using this data, we saw which proficiencies were most sought after and which sets were in demand. This allowed us to give skills and complementary skills a financial value based on the demands of the labor market.”
Ole Teutloff, another contributor, added: “Conceptualizing the relationship between skills as a network enabled us to show the context dependency of human capital.”
Dr. Stephany emphasized the broader implications: “Our findings have profound implications for individuals, businesses, and policymakers. By recognizing the value of complementarity, we can better guide workers on their reskilling journeys in times of technological change.”
Key principles for the new economy
The study’s findings are particularly relevant in the context of a global workforce preparing for the new economy. Three fundamental principles emerge:
1. Skill sets
In the modern job landscape, most positions require a combination of skills. Therefore, assessing the value of a skill must consider its complementarity with other skills. The interplay between competencies is crucial in determining a skill’s economic worth.
2. Reskilling efficiency
As workers adapt to new technologies, they acquire additional skills to augment their repertoire. Maximizing the complementarity between their old and new skills becomes essential for economic efficiency. Workers who can seamlessly integrate new competencies with existing ones are better positioned to succeed in a rapidly changing job market.
3. Strategic value
Skills that possess diverse complementary competencies provide workers with strategic options for reskilling. This diversification enhances their resilience against unforeseen technological changes, empowering them to thrive in the future job landscape.
This groundbreaking study from the Oxford Internet Institute and the Center for Social Data Science highlights the economic value of skills and the critical role played by skill complementarity. As industries continue to evolve in the age of AI and emerging technologies, workers and policymakers can leverage these insights to make informed decisions about skill development and workforce readiness.
Source: https://www.cryptopolitan.com/ai-skills-lead-the-way-oxford-study-unveils/