Speed and Direction of Changes of Skills Demand, within Occupations, across European Countries

Emilio Colombo, Anna Giabelli, Fabio Mercorio, Mario Mezzanzanica, Francesco Trentini

Pillars Report


This report aims to study the speed and direction of change that occupations undergo regarding skills composition for different European regions. One peculiar aspect of this research is the application of AI methods, such as word embeddings and machine learning to conduct economic analysis. We measure changes in the occupation skill sets based on the words used to advertise job vacancies in online job ads (OJAs) to measure changes between and within European countries, considering occupations’ specificity. Secondly, we build upon this novel evidence and estimate changes in the quality of demand for occupations, measured in terms of changes at the intensive and extensive margin, namely in the relevance of existing skills through time and the importance of novel skills that emerge through time.

We study how occupations change in France, Germany, Italy, the Netherlands and the UK over the period 2019-2021 by analysing the evolution of their skill set. We study the evolution of skill demand at the intensive and the extensive margin, namely in the relevance of skills in occupations and the emergence of new skills. We leverage established econometric techniques to estimate the relative impact of digital, professional and soft skills in the change at the intensive margin and innovative AI methods to document the speed of change of the skill set at the extensive margin.