The role of skill-biased technological change for increasing wage inequality is well documented. Interestingly, we find that even though in Germany from 1986 to 2012 wage inequality rose, the wage penalty of a disadvantaged family background declined. Our analysis shows that this development is consistently linked to technological progress. The introduction and the use of new technologies in certain occupations explain the rising share of workers with disadvantaged parental background in those occupations as well as their rising relative wages. This is consistent with the hypothesis that due to technological change the returns to individual abilities increase relative to the returns to parental background, as parents' occupation specific knowledge and networks depreciate during rapid technological transformations.