The Virtuous Cycle Between Skills and Technology

Sascha Becker, Christian Dustmann and Hyejin Ku

No 26013, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We examine the long-term labor market impact of the steam engine, an early general-purpose technology, by linking newly digitized 19th-century records from Prussia to modern German labor market data (1975-2019). Regions with a higher concentration of steam engines per worker in 1875 exhibit higher wages today, primarily because of higher firm productivity and a more skilled workforce. These regions also exhibited greater skill diversity in 1939 and generated more innovations between 1877 and 1918, a pattern that persists to this day. Our findings highlight a lasting, self-reinforcing cycle between technology and skills, set in motion by the steam engine, offering a novel explanation for regional income disparities and their persistence.

Keywords: steam engine; technology adoption; diversity; innovation; human capital; productivity (search for similar items in EconPapers)
JEL-codes: I24 J24 O14 O33 (search for similar items in EconPapers)
Date: 2026-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.rfberlin.com/wp-content/uploads/2026/01/26013.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:26013

Access Statistics for this paper

More papers in RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin) Contact information at EDIRC.
Bibliographic data for series maintained by Moritz Lubczyk () and Matthew Nibloe ().