Using a large, individual-level wage data set, we examine the impact of a major technological innovation—the steam engine—on the demand for skills in the merchant shipping industry. We find that the technical change created a new demand for engineers, a skilled occupation. It had a deskilling effect on production work—moderately skilled able-bodied seamen were replaced by unskilled engine room operatives. On the other hand, able-bodied seamen, carpenters, and mates employed on steam vessels earned a premium relative to their counterparts on sail vessels, and this appears partly related to skill.

Research on the effect of language skills on earnings is complicated by the endogeneity of language skills. This study exploits the phenomenon that younger children learn languages more easily than older children to construct an instrumental variable for language proficiency. We find a significant positive effect of English proficiency on wages among adults who immigrated to the United States as children. Much of this effect appears to be mediated through education. Differences between non-English-speaking origin countries and English-speaking ones that might make immigrants from the latter a poor control group for nonlanguage age-at-arrival effects do not appear to drive these findings.