Technological change and wage premiums: historical evidence from linked employer-employee data
Pehkonen, J., Hynninen, S.-M., & Ojala, J. (2013). Technological change and wage premiums: historical evidence from linked employer-employee data. Labour Economics, 24 (10), 1-11. doi:10.1016/j.labeco.2013.05.006
Published inLabour Economics
© 2013 Elsevier B.V. This is a final draft version of an article whose final and definitive form has been published by Elsevier. Published in this repository with the kind permission of the publisher.
This study analyses the impacts of a technological change (the steam engine) on wage premiums. Using historical employer–employee panel data, we found that steam technology had both new skill-demanding and skill-replacing aspects. The former manifested itself as an increase in the demand for high-skilled engineers, the latter in a decline in the demand for intermediate-skilled, able-bodied seamen and an increase in the demand for unskilled engine room operators. Our panel data analysis, which controls for unobserved heterogeneity, implies that high-skilled labourers in abstract tasks and unskilled labourers in manual tasks improved their wage positions relative to intermediate-skilled labourers in routine tasks. These findings are compatible with the hypothesis of technology-based polarisation.