AI-Powered Skill Classification: Mapping Technology Intensity in the German Labor Market

The rapid evolution of technology is reshaping labour markets by altering skill demands and job profiles. This paper introduces a novel skill-based measure of occupational technology intensity – the occupational technology skill share (OTSS) – that distinguishes between manual, digital and frontier technologies, including artificial intelligence (AI). Using natural language processing, generative AI and supervised machine learning, we develop an AI-powered skill classification that enriches occupation-linked skill labels with standardised GenAI-generated descriptions and structured indicators of technological content, enabling transparent classification by technology intensity. We compute OTSS for all occupations in the German labour market. For the average worker in 2023, manual technologies account for the largest share of skill content (42 per cent), followed by digital (38 per cent) and frontier technologies (20 per cent). Frontier technologies remain concentrated in specialised occupations, while digital technologies are widespread. Linking these measures to administrative data from 2012 to 2023 shows a broad shift from manual and digital toward frontier skills across occupations, and reveals a non-linear, U-shaped relationship between changes in frontier skill intensity and employment growth.

Genz, Sabrina, Terry Gregory and Florian Lehmer (forthcoming), AI-Powered Skill Classification: Mapping Technology Intensity in the German Labor Market, Fiscal Studies