Finance
Steam engines behind German wage and innovation gaps 150 years on, study shows
Published by Global Banking & Finance Review®
Posted on January 14, 2026
2 min readLast updated: January 19, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 14, 2026
2 min readLast updated: January 19, 2026
Steam engines continue to influence Germany's economy, with regions of early adoption showing higher wages and innovation. The study suggests AI could have similar long-term benefits.
BERLIN, Jan 14 (Reuters) - The steam engine is still shaping Germany's economy long after its invention with a new study saying areas that adopted the technology early still carry advantages, suggesting that early adoption of AI could bring similar benefits.
Regions where steam engines were particularly widespread at the end of the 19th century still have average wages that are 4.3% higher than elsewhere, according to research by the ROCKWOOL Foundation Berlin (RFBerlin), which was shared with Reuters ahead of its publication on Wednesday.
Around 150 years on, those areas also have a larger share of workers with technical training and university degrees, the study found, and are home to more productive firms and higher numbers of patent filings.
"The steam engine didn't just power factories; it also changed technology and the development of skills across entire regions over generations," said Christian Dustmann, director of RFBerlin and a professor at University College London.
EARLY AI ADOPTION CAN HAVE LONG-TERM POSITIVE EFFECTS
Dustmann said the findings could hold lessons for policymakers today as economies grapple with the rise of artificial intelligence.
Sascha Becker, the project lead at RFBerlin, said the steam engine helped trigger a self-reinforcing cycle in which technological change spurred skills acquisition, supporting further innovation and growth in turn.
"These historical lessons suggest - although it is still very early - that rapid adoption of AI could once again help determine which regions and countries will benefit in the long term from the advantages of change," he added.
(Reporting by Rene Wagner, writing by Maria Martinez; Editing by Aidan Lewis)
A steam engine is a heat engine that performs mechanical work using steam as its working fluid, historically significant for powering machinery during the Industrial Revolution.
Innovation refers to the process of creating new ideas, products, or methods that improve efficiency, effectiveness, or competitive advantage in various fields.
Artificial intelligence (AI) is the simulation of human intelligence processes by machines, especially computer systems, enabling them to perform tasks that typically require human intelligence.
Economic research involves the systematic study and analysis of economic data and trends to understand and predict economic behavior and outcomes.
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