Technical Change and the Wage Structure During the Second Industrial Revolution: Evidence from the Merchant Marine, 1865-1912
51 Pages Posted: 6 Sep 2004
Date Written: September 2004
Using a large, individual-level wage data set, we examine the impact of a major technological innovation - the steam engine - on skill demand and the wage structure in the merchant shipping industry. We find that the technical change created a new demand for skilled workers, the engineers, while destroying demand for workers with skills relevant only to sail. It had a deskilling effect on production work - able-bodied seamen (essentially, artisans) were replaced by unskilled engine room operatives. On the other hand, mates and able-bodied seamen employed on steam earned a premium relative to their counterparts on sail. A wholesale switch from sail to steam would increase the 90/10 wage ratio by 40%, with most of the rise in inequality coming from the creation of the engineer occupation.
Keywords: wage inequality, skill premium, skill-biased technical change
JEL Classification: I21, J62, H52
Suggested Citation: Suggested Citation