Skills or Degree? The Rise of Skill-Based Hiring for AI and Green Jobs

46 Pages Posted: 13 Nov 2023 Last revised: 28 Feb 2024

See all articles by Eugenia Gonzalez Ehlinger

Eugenia Gonzalez Ehlinger

Multiverse

Fabian Stephany

University of Oxford - Oxford Internet Institute; Bruegel; Alexander von Humboldt Institute for Internet and Society

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Date Written: February 25, 2024

Abstract

For emerging professions, such as jobs in the field of Artificial Intelligence (AI) or sustainability (green), labour supply does not meet industry demand. In this scenario of labour shortages, our work aims to understand whether employers have started focusing on individual skills rather than on formal qualifications in their recruiting. By analysing a large time series dataset of around one million online job vacancies between 2020 and 2023 from the UK and drawing on diverse literature on technological change and labour market signalling, we provide evidence that employers have started so-called “skill-based hiring” for AI and green roles, as more flexible hiring practices allow them to increase the available talent pool. In our observation period the demand for AI roles grew twice as much as average labour demand. At the same time, the mention of university education for AI roles declined by 23%, while AI roles advertise five times as many skills as job postings on average. Our regression analysis also shows that university degrees no longer show an educational premium for AI roles, while for green positions the educational premium persists. In contrast, AI skills have a wage premium of 16%, similar to having a PhD (17%). Across occupations, we are able to relate the increase in the wage premium for AI and green skills to their rising demand. Our work recommends making use of alternative skill building formats such as apprenticeships, on-the-job training, MOOCs, vocational education and training, micro-certificates, and online bootcamps to use human capital to its full potential and to tackle talent shortages.

Keywords: skills, online job vacancies, labour economics, education, AI, sustainability

JEL Classification: C55, I23 J23, J24, J31

Suggested Citation

Gonzalez Ehlinger, Eugenia and Stephany, Fabian, Skills or Degree? The Rise of Skill-Based Hiring for AI and Green Jobs (February 25, 2024). Available at SSRN: https://ssrn.com/abstract=4603764 or http://dx.doi.org/10.2139/ssrn.4603764

Eugenia Gonzalez Ehlinger

Multiverse ( email )

London
United Kingdom

Fabian Stephany (Contact Author)

University of Oxford - Oxford Internet Institute ( email )

1 St. Giles
University of Oxford
Oxford OX1 3PG Oxfordshire, Oxfordshire OX1 3JS
United Kingdom

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Alexander von Humboldt Institute for Internet and Society ( email )

Bebelplatz 1 | 10099
Berlin
Germany

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