Technological change and wage premiums: Historical evidence from linked employer–employee data

Abstract

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 highskilled 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 technologybased polarisation.

Deskilling and decline in skill premium during the age of sail: Swedish and Finnish seamen, 1751–1913

“…If the supply of labor is fixed, this also leads to changes in relative wages: non-routine jobs that are either at the top or at the bottom of the wage distribution both gain a wage premium in relation to tasks in the middle of the wage distribution. Hynninen et al (2013) have argued that the technology-based polarization indeed occurred when steam slowly replaced sail in international shipping, leading to both skilling and deskilling.…”

“…The wage dispersion and changes in skill premia have recently been analyzed in the context of the change from sail to steam and the rise of Atlantic trade in the nineteenth century. (van Lottum and Poulsen, 2011;van Lottum and van Zanden, 2014) Thompson (2003), Chin et al (2006), and Hynninen et al (2013) argue that technological change increased wage dispersion among sailors. Chin et al posit that the change created demand for new skilled occupations and had a deskilling effect overall.…”

“…Chin et al posit that the change created demand for new skilled occupations and had a deskilling effect overall. However, neither Thompson (2003), Chin et al (2006), nor Hynninen et al (2013) focus on the long-run distribution of wages or the development of the skill premium in shipping prior to the mid-nineteenth century.…”

New Markets and New Jobs

“…A number of recent studies find evidence that job polarisation in the United States and in Europe is accounted for by declining demand for routine tasks (Autor et al, 2006 andGoos et al, 2011;Van Reenen, 2011;Autor and Dorn, 2013;Hynninen et al, 2013) but only one of them (Michaels et al, 2014) establishes a direct link between ICT use and demand for skills.…”

Employers’ Needs and Expectations for Qualified Employees (Case Study on the Opinions in One of the Regions in Latvia)

“…Slovak researchers have found the factors for determining company efficiency through the investment to the employees as well as have investigated quantitative valuation (Korenkova & Urbanikova, 2014). Several studies on the selection process history were studied as well (Schulz, et al, 2014) and Hynninen, et al, 2013) for better findings of current effective labour market solutions (Nikandrou, et al, 2009) as well as a variety of other fields (Tidwell, et al, 2009). Maxwell, et al, (2010) have stated that key points for employers as stakeholders in postgraduate employability skills development are that employers themselves can increase their stake in employability skills development in two ways: by working in partnership with universities on the core and component skills they seek from graduates and by assuming their share of responsibility for the development of these skills.…”