What is the price of a skill? The value of complementarity

Are occupations "bundles of skills"? Identifying latent skill profiles in the labor market using topic modeling

“…Second, the topic distributions indicate that the same skill category can play different roles depending on the type of job: while some skills are the primary feature of some job postings, they appear only secondarily in others. This confirms the importance of context and supports the idea that jobs differ in the extent to which they require different and/or complementary skills (Anderson, 2017;Stephany and Teutloff, 2024). With the biterm topic model, we can map the skill content of jobs without obscuring these heterogeneous patterns, which may appear not only between but also within occupations.…”

“…There is evidence that new forms of work organization increasingly require workers to develop skills that were traditionally associated with different occupations (Hénaut et al, 2023). Consistently, workers who synergistically combine skills from different domains are found to have the strongest labor market advantage (Anderson, 2017;Stephany and Teutloff, 2024).…”

“…In particular, some skills are synergistic in that they enhance the effectiveness of others, giving workers a comparative wage advantage (Anderson, 2017). For example, programming languages or generalist legal skills can be combined with a wide range of high-value skills, making them particularly profitable in the labor market (Stephany and Teutloff, 2024).…”

“…The limited conceptualization of the relationship between skills in the previous sociological and economic literature indeed obscures important dynamics. The effects of labor market changes are mainly analyzed through the lens of the growing or declining demand for isolated skills, which obscures how these changes can reshape the complementarities of workers' skills and their associated values and returns (Stephany and Teutloff, 2024). For example, Deming (2017) finds that the puzzling stagnation in the demand for high-skilled labor since 2000 masks a growing complementarity between cognitive and social skills: the return to math skills has increased mainly for workers with high levels of interpersonal skills.…”

“…To uncover the skill profiles of jobs, we take a bottom-up approach that categorizes skills based on their co-occurrence at the job level. In doing so, we build on previous approaches that used network analysis to identify data-driven communities of similar skills (Anderson, 2017;Alabdulkareem et al, 2018;Djumalieva and Sleeman, 2018;Stephany and Teutloff, 2024). These studies have made significant progress in mapping the skill structure of the labor market, but their methodology implies that the division of skills is a partition problem: each skill belongs to one and only one community.…”