Using a large, individual-level wage data set, we examine the impact of a major technological innovation u2013 the steam engine u2013 on skill demand and the wage structure in the merchant shipping industry. We find that the technical change created a new demand for skilled workers, the engineers, while destroying demand for workers with skills relevant only to sail. It had a deskilling effect on production work u2013 able-bodied seamen (essentially, artisans) were replaced by unskilled engine room operatives. On the other hand, mates and ablebodied seamen employed on steam earned a premium relative to their counterparts on sail. A wholesale switch from sail to steam would increase the 90/10 wage ratio by 40%, with most of the rise in inequality coming from the creation of the engineer occupation.
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