The main aim of the project was to improve the theoretical and empirical understanding of the interdependency between education, innovation and the labour market. The firm level data of the Mannheim innovation panel and the person data of the Mikrozensus of the years 1991, 1993 and 1995, the IAB employee sample from 1975 to 1990 as well as the BIBB/IAB census of 1979, 1985/86 and 1991/92 served as the basis for the empirical work. Estimations using the ZEW data have shown differences in the impact of process and product innovation on employment. Overall, the effect was negative in the first half of the 1990’s. The impact on employment in specific skill groups are more important than the impact of innovations on employment overall. While innovations lead to an increase in working places for highly skilled employees even in times of modest economic growth, working places of lower qualified employees dissolve. This skill biased technological progress has intensified by the inflexible wage structure during the past 30 years in Germany. In other countries with more flexible wages, adjustment to technological shocks took place although through more wage inequality. The research on the determinants and effects of continuing education have shown that eminent selection effects exist and that continuing education and the career path are closely linked to each other. Professional training is often the consequence and not the cause of promotions in firms. Therefore, it is doubtful whether intensified qualificational measures are the adequate instrument to solve labour market problems of the low skilled. In comparison, the importance of a high quality school and secondary education for the career path and the economy is often underestimated.