The demand and supply of new skills—especially in IT and AI—are reshaping labor markets,

impacting wages and hiring. About 1 in 10 job vacancies in advanced economies demands at least one new

skill, often appearing first in the United States. The incidence is about half of that in emerging market

economies. These skills boost average wages and employment but deepen polarization, mostly benefitting

high- and—through higher consumption of services—low-skilled workers, and potentially contributing to the

shrinking of the middle class. Vacancies demanding AI skills post higher wages, but the diffusion of such skills

is linked to lower employment in occupations with high exposure and low complementarity to AI, posing

challenges for the youth. A Skill Imbalance Index reveals wide cross-country differences. Econ ...