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

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  • Hynninen, Sanna-Mari
  • Ojala, Jari
  • Pehkonen, Jaakko

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 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.

Suggested Citation

  • Hynninen, Sanna-Mari & Ojala, Jari & Pehkonen, Jaakko, 2013. "Technological change and wage premiums: Historical evidence from linked employer–employee data," Labour Economics, Elsevier, vol. 24(C), pages 1-11.
    • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:1-11
    DOI: 10.1016/j.labeco.2013.05.006
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    2. Benjamin Schneider & Hillary Vipond, 2023. "The Past and Future of Work: How History Can Inform the Age of Automation," CESifo Working Paper Series 10766, CESifo.
    3. Schneider, Benjamin & Vipond, Hillary, 2023. "The past and future of work: how history can inform the age of automation," Economic History Working Papers 119282, London School of Economics and Political Science, Department of Economic History.
    4. Walheer, Barnabé, 2023. "Meta-frontier and technology switchers: A nonparametric approach," European Journal of Operational Research, Elsevier, vol. 305(1), pages 463-474.
    5. Ojala, Jari & Pehkonen, Jaakko & Eloranta, Jari, 2016. "Deskilling and decline in skill premium during the age of sail: Swedish and Finnish seamen, 1751–1913," Explorations in Economic History, Elsevier, vol. 61(C), pages 85-94.
    6. Janssen, Simon & Mohrenweiser, Jens, 2018. "The Shelf Life of Incumbent Workers during Accelerating Technological Change: Evidence from a Training Regulation Reform," IZA Discussion Papers 11312, Institute of Labor Economics (IZA).
    7. Sloka Biruta & Kantāne Ināra & Buligina Ilze & Tora Ginta & Dzelme Juris & Buševica Regīna & Buligina Alise & Tora Pēteris, 2015. "Employers’ Needs and Expectations for Qualified Employees (Case Study on the Opinions in One of the Regions in Latvia)," Economics and Business, Sciendo, vol. 27(1), pages 69-75, August.

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    More about this item

    Keywords

    Wage; Premium; Skill; Task; Technological change; Polarisation;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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