Reading, mathematics, and problem-solving skills are expected to remain important in the labor market and may even become more valuable in the age of artificial intelligence, according to a new study by the Taub Center. The study examined the relationship between workers’ level of foundational skills and their wages, as well as how the expanding use of artificial intelligence may affect demand for these skills.
The study, conducted by Michael Debowy, Prof. Gil Epstein, and Prof. Avi Weiss, is based on data from the OECD’s Survey of Adult Skills (PIAAC) for 2022–2023. The researchers found that workers in occupations exposed to replacement by artificial intelligence, such as software developers, accountants, designers, financial advisers, legal professionals, and clerical workers, tend to have higher levels of reading, mathematics, and problem-solving skills, and earn accordingly.
However, the study’s central finding is not that artificial intelligence will replace highly skilled workers, but rather that the economic returns to these skills are largely similar in both occupations exposed to AI and those that are not. Employers are therefore expected to continue paying more to workers who can read well, perform calculations, and think independently, regardless of whether or not they use AI tools.
Prof. Weiss said, “The concern over the loss of basic skills in the age of social media and screens is real and worrying. It seems that many young people feel that the development of artificial intelligence makes it unnecessary to invest in foundational skills, but in reality, the opposite is true: the ability to work with and alongside artificial intelligence will require the next generation to have even more advanced skills than those that exist today. Recognizing this reality is important not only for government bodies, which are responsible, among other things, for educating our children, but also for every parent.”
Productivity Gains May Curb Wage Declines
The researchers also examined various scenarios involving the replacement of workers by artificial intelligence. According to the study, in the extreme scenario in which most or all workers in AI-exposed occupations are replaced and productivity gains are negligible, average wages in these occupations are expected to fall by around 5% to 9%. In scenarios in which the replacement rate is lower – up to one-quarter of workers – and productivity does not improve, the expected decline in wages would be only a few percentage points.
In the scenario the researchers consider more likely, in which artificial intelligence not only replaces workers but also enables work to be performed more efficiently, the technology could save up to tens of percent in labor costs and increase productivity by 3.5% to 9%. According to the researchers, this increase in productivity could offset the decline in wages resulting from worker replacement, while also creating new jobs and increasing demand for workers with higher levels of skills.
“The data indicate that even in the age of artificial intelligence, the labor market will continue to reward foundational skills in reading, mathematics, and problem-solving—perhaps even more than it does today,” said researcher Debowy. “Workers who want to improve their earning potential should invest in these skills, and the state should make it easier for them to do so. This recommendation is all the more important given the relatively low level of these skills among the Israeli workforce compared with the rest of the world.”
Israelis Are Highly Educated, but Not Highly Skilled
Alongside the possible impact of artificial intelligence on the labor market, the study points to another problem: the level of foundational skills in Israel is significantly lower than in developed countries. Israel ranks between 25th and 27th out of the 31 countries examined, depending on the skill being assessed. The gap is particularly pronounced among the Arab and Haredi populations, but according to the study, even among the non-Haredi Jewish population, skill levels are no higher than the average across developed countries.
The figure is particularly striking given Israel’s high rate of educational attainment. The researchers note that Israel is one of the most highly educated countries in the world in terms of the share of the population holding academic degrees, but this does not necessarily translate into a high level of foundational skills as measured by the survey.
This leads to one of the study’s conclusions: expanding the use of artificial intelligence does not reduce the need to acquire foundational skills, but may instead increase their importance. These skills may be necessary not only to perform work without technological assistance, but also to know how to use AI tools effectively, evaluate their outputs, and identify errors.
The implication for the labor market, according to the study, is that the central question in the age of artificial intelligence is not simply which occupations will disappear and which new ones will emerge. Even within occupations that are transformed by technology, workers’ ability to use new tools and evaluate their outputs is expected to be linked to their level of foundational skills. For Israel, the researchers point to improving these skills as a prerequisite for coping with the technological changes ahead.
“Foundational Skills Are a Prerequisite for Using Technology, Not a Substitute for It”
The researchers call on the Education Ministry and the Labor Ministry to invest in strengthening reading, mathematical reasoning, and problem-solving skills, alongside the integration of artificial intelligence tools into the education system and vocational training. They also warn against the erosion of skills as a result of daily technology use, emphasizing the need to preserve workers’ ability to perform these tasks independently.
Prof. Gil Epstein: “Artificial intelligence knows how to read, calculate, and solve problems for us—but those who have not acquired these skills themselves will not know how to use it or recognize when it makes a mistake. Foundational skills are a prerequisite for using technology, not a substitute for it, and precisely because machines can perform these tasks so easily, we must not give them up.”