One of the biggest questions of our time is how accelerating technological developments are affecting the way our economies work. The internet, the 'third industrial revolution', is fundamentally changing the way modern economies work and the project focuses on this. The first part looks at how labour markets are being affected and the fact that information technology is seen as particularly beneficial to highly educated workers. In most countries, the income gap between low and highly educated people is widening, but it is difficult to know how much is due to technological change. And what kind of education, experience and other characteristics are required when technology is renewed? The second part of the project looks at the impact on firm productivity and how changes at the firm level affect the development of aggregate productivity in society. The third part examines how globalization is affected by the internet. Will the role of geography in trade diminish with the development of the Internet, leading to the so-called "death of distance"?

This application is specifically for a continuation and extension of this project. The first of the three sub-projects has been completed and published in the Quarterly Journal of Economics. This sub-project has also received an important follow-up project focusing on how to empirically measure technological change at the firm level. In addition, the sub-project on international trade has been extended to include a theoretical model and a more structural empirical basis for discussion.