This study explores how the digital transformation is affecting the demand for skills in 31 countries, by analysing how skills are rewarded in sectors which are more or less digitally intensive. In so far as higher salaries reflect relative skills shortage, returns to skills contribute to inform on how the demand of different skills is met by labour market supply.
The analysis differs from previous studies in several ways. First, it investigates the returns to different types of skills, both cognitive skills, i.e. skills acquired through education such as literacy, numeracy and problem solving, and non-cognitive skills and personality traits, which are measured using information about the tasks that workers perform on the job. Special emphasis is devoted to: information and communication technologies (ICT)- related skills; advanced numeracy skills; managing and communication skills and self- organisation; readiness to learn and creative problem solving.
Furthermore, the study addresses the important question of skill complementarities and investigates whether and to what extent cognitive and non-cognitive skills are demanded together. As different technologies display different degrees of complementarity (or substitutability) to different types of skills, the study explores how the multidimensionality of skills relates to the digital transformation. In the presence of skill complementarities, the labour market rewards such bundles more than individually considered skills.
Third, the study highlights how returns to skills differ across digitally intensive and less digitally intensive sectors, thanks to a new taxonomy of sectors by their degree of digital transformation. The taxonomy takes into account some of the many facets that the digital transformation may take, and in particular its technological component, its human capital requirements, and new forms of market access in the digital era.
The analysis is carried out on data from the Programme for the Assessment of Adult Competencies (PIAAC). This extensive survey covers 31 OECD countries and partner economies and provides a wealth of information about workers’ skills, the tasks they perform on the job, and their workplace, among others. The rich set of individual-level information available makes it possible to estimate the role of skills in determining wages with accuracy and minimising measurement errors.
The findings indicate that cognitive as well as non-cognitive skills are strongly rewarded by labour markets, even when controlling for industry and occupation fixed effects, and other characteristics of the individual worker (including education). Furthermore, digital intensive industries especially reward workers having relatively higher levels of self- organisation and advanced numeracy skills. Also, for workers in digital intensive industries, bundles of skills are particularly important: workers endowed with a high level of numeracy skills receive an additional wage premium, if they also show high levels of self-organisation or managing and communication skills.
The results in the present study can contribute to design effective and forward-looking skills and employment policies, aimed at aligning labour market demand and supply and helping workers to succeed in the digital era.