Technological change and the labor market : evidence on the impact of the steam engine in late-19th century merchant maritime shipping industry

Abstract

The rise in wage inequality in the late-20th century has been widely linked to technological progress and the non-monotonic effect it has on workers of dif-ferent skill levels. Much of the work has been done in the context of recent advances in information and communication technology, which has revolu-tionized work since the 1970s. This Master’s thesis provides information on the impact of the steam engine, which produced wide and long lasting eco-nomic growth from the 19th century to early-20th century. The analysis focuses on high-skilled seamen in the Swedish merchant maritime shipping industry from 1869 to 1914. During this time period steam-powered vessels gradually replace traditional sailing ships.

Five high-skill occupations are separately analyzed. Technological change from sail to steam caused large demand for new skills. The new occupation, steam engineers, enjoyed large real wages in the early period of technological adaptation. High relative wages of steam engineers are accompanied by large wage differentials within the high-skill group in the early adaptation period. Towards the end of the period the real wages of steam engineers grew slowly and declined, and the wage dispersion within the group declined. Overall, all occupations in the high-skill group received large absolute wage gains under steam technology. This premium prevails also after controlling for occupational change after switching from sail to steam and controlling for unobservable characteristics.