Wage growth of less educated workers: the importance of social skills

GAICIL Insights

The standard story of the AI era says the future belongs to the credentialed. This paper hands a quieter advantage to the colleague who makes the team work.¹ Wage growth of less educated workers: the importance of social skills, by Philippe Aghion, Antonin Bergeaud, Richard Blundell and Rachel Griffith, uses matched employee-employer data from the UK to identify an overlooked driver of wage progression for workers without advanced formal education: social skills, in particular teamwork and communication with co-workers.

The findings are encouraging. In occupations where social skills are important, a significant fraction of less educated workers enjoy wage progression with tenure. Returns are higher in firms with more educated co-workers. Leveraging new linked worker-firm administrative data, the authors show that less educated workers in occupations where social skills such as teamwork matter experience stronger individual wage growth than other less educated workers. A degree is one ladder; collaboration is another.

The model explains why the reward arrives slowly. Social skills are initially opaque to both employee and employer. They are learned about over time through complementarity with co-workers. As workers demonstrate their ability to collaborate and communicate, employers learn their value and wages rise. More educated co-workers amplify the process, consistent with complementarity between social skills and colleagues' skills. Talent invisible on a résumé becomes visible on the shop floor.

The relevance to artificial intelligence is direct. AI is expected to automate many routine cognitive tasks, and concern about less educated workers' prospects is widespread. The paper highlights skills, teamwork and communication, that are hard to automate and offer less educated workers a path to wage growth. Social skills are a distinctively human capability, and their value may rise as AI takes over other tasks. The machine can draft the memo; getting colleagues to act on it is another skill entirely.

Complementarity with educated co-workers is the hopeful channel. If AI raises the productivity of highly educated workers, and less educated workers with strong social skills complement them, AI's gains could be shared more widely. Workplaces combining AI tools, educated professionals and socially skilled workers could generate wage growth across the education spectrum. The team may be the unit that captures AI's dividend.

The learning mechanism carries an institutional message. Because social skills are initially opaque, workers need time and opportunity to demonstrate them. Job stability and tenure allow this learning. Labor market institutions supporting longer employment relationships, and firms investing in teams, help reveal and reward social skills. AI tools helping managers observe collaboration might accelerate the process, though they should be used with care for privacy. High churn may destroy value nobody ever measured.

For education and training, social skills deserve attention alongside technical skills. Programs developing teamwork and communication can raise earnings potential for workers without advanced degrees. As AI changes the demand for skills, such programs may become increasingly valuable. A coding bootcamp is one answer to AI; a collaboration curriculum may be another.

Firm strategy follows. Organizing work in teams combining different educational backgrounds may yield complementarities that raise productivity and wages. Returns to social skills appear highest in firms with more educated co-workers, suggesting mixing skills is productive. AI adoption that preserves and strengthens team-based work could support these gains; adoption that atomizes work into solo tasks may forfeit them.

Inclusive growth is the bigger frame. Concerns that innovation benefits only the highly educated are common. This research shows less educated workers can share in productivity growth through social skills and complementarity with co-workers. Policies and practices supporting these channels make technological progress more inclusive.

Seen whole, the paper's message is plain: human capabilities beyond formal education matter for wages. Teamwork and communication, learned about over time and complemented by educated colleagues, drive wage growth for less educated workers. As AI reshapes the labor market, these skills may matter even more.

One question to put to HR leaders automating hiring with AI: screens built on credentials will miss the very skills this paper finds paying off over time. The best predictor of a less educated worker's wage path may be the team placed around them.