Practical expertise drives salary premiums in the AI sector, finds new Oxford study

New analysis from researchers at the Oxford Internet Institute, University of Oxford, published in Technological Forecasting and Social Change on 26 February 2025, examines how businesses in the UK are responding to the hiring gaps in AI-related recruitment, and whether skills proficiency commands a higher salary than a higher education degree. 

In their paper, “Skills or degree? The rise of skill-based hiring for AI and green jobs”, the Oxford team analysed over 10 million online job vacancies in the UK between 2018 to 2024, and applied statistical analysis and a regression model to examine the association between higher education degrees, skills requirements and financial remuneration.  

The researchers find: 

Specific skills now outweigh traditional qualifications in many AI jobs 

• Between 2018 and 2024, job postings requiring at least one AI skill increased by nearly 21%.  

• For AI-related roles, such as developing a chatbot like ChatGPT, job advertisements were three times more likely to mention explicit skills compared to job openings in other sectors. 

• AI related occupations typically still require a higher level of education and a larger number of skills, reflecting the complex nature of these roles. 

Fewer AI employers require formal higher education qualifications  

• Between 2018 and 2014, the number of AI job advertisements requiring formal higher education qualifications fell by 15%. 

• The demand for formal education requirement for AI roles has fallen over time, from 36% of AI roles in 2018 to 31% of AI roles in 2023, suggesting a slight shift towards employers valuing skills and experience over formal education in AI roles. 

Shifts in demand for specialist skills lead to higher salaries in AI-related fields 

• Science, engineering, and technology jobs, such as Data Scientists, requiring AI capabilities and skill-based qualifications can lead to salaries that are three times higher than general roles stipulating higher education qualifications, like bachelor's or master's degrees.  

• AI skills and expertise are highly valued by employers, offering a 23% wage premium, compared to a 13% wage premium for Master's degrees and a 33% premium for PhDs. 

• In science, engineering, and tech jobs, the AI skills premium is 36%, higher than the wage premium for formal degrees. 

Commenting on the findings, Dr Fabian Stephany, Departmental Research Lecturer in AI & Work, Oxford Internet Institute, and co-author of the study said,  

'Our research suggests that the UK’s labour market is undergoing a fundamental shift. The traditional path of university education leading to higher pay is no longer the default for AI professionals, who are now being rewarded for practical skills and industry-specific know-how. 

'Education and training providers should embrace flexible programmes informed by industry requirements and provide micro-certificates and credentials for skills acquired outside of formal education.  

By valuing a candidate’s proven abilities as much as their academic background, employers can access to a far wider talent pool – one better suited to handle the rapid evolution defining the future of work.' 

Download the full paper, ‘Skill or Degree? The Rise of Skill-Based Hiring for AI and Green Jobs’, Matthew Bone, Eugenia Ehlinger and Fabian Stephany, published in the Journal of Technological Forecasting and Social Change on 26 February 2025. 

Notes for Editors  

This study focused on the online job vacancy market.  For more information and briefings, please contact: Sara Spinks / Veena McCoole, Media and Communications Manager.   

T: 01865 280527 E: press@oii.ox.ac.uk 

About the research 

The research was based on a large-scale data analysis of online job postings from thousands of websites—including job boards, company career pages, and aggregators between January 2018 and June 2024.  

Funding information 

Dr Fabian Stephany is supported by funding from the Oxford Internet Institute’s Research Programme on AI & Work, funded by the Dieter Schwarz Stiftung gGmbH. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.  Matthew Bone received funding from the UK Economic and Social Research Council. This work is part of the Buegel Future of Work and Inclusive Growth project. 

About the Oxford Internet Institute (OII)  

The Oxford Internet Institute (OII) is a multidisciplinary research and teaching department of the University of Oxford, dedicated to the social science of the Internet. Drawing from many different disciplines, the OII works to understand how individual and collective behaviour online shapes our social, economic and political world. Since its founding in 2001, research from the OII has had a significant impact on policy debate, formulation and implementation around the globe, as well as a secondary impact on people’s wellbeing, safety and understanding. Drawing on many different disciplines, the OII takes a combined approach to tackling society’s big questions, with the aim of positively shaping the development of the digital world for the public good. 

About the University of Oxford 

Oxford University has been placed number 1 in the Times Higher Education World University Rankings for the ninth year running, and number 3 in the QS World Rankings 2024. At the heart of this success are the twin-pillars of our ground-breaking research and innovation and our distinctive educational offer. 

Oxford is world-famous for research and teaching excellence and home to some of the most talented people from across the globe. Our work helps the lives of millions, solving real-world problems through a huge network of partnerships and collaborations. The breadth and interdisciplinary nature of our research alongside our personalised approach to teaching sparks imaginative and inventive insights and solutions. 

Through its research commercialisation arm, Oxford University Innovation, Oxford is the highest university patent filer in the UK and is ranked first in the UK for university spinouts, having created more than 300 new companies since 1988. Over a third of these companies have been created in the past five years. The university is a catalyst for prosperity in Oxfordshire and the United Kingdom, contributing £15.7 billion to the UK economy in 2018/19, and supports more than 28,000 full time jobs.