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This science and technology options assessment (STOA) study investigates the potential employment effects of new information and communication technologies by examining the relationship between innovation, new technologies, employment and inequality. It reviews the existing literature and experiences of previous technological revolutions and argues that the race between job creation through new products and job destruction from process innovation has been won in the past by the job-creating effects of innovation. It concludes that there is an uneven distribution in the costs of digitalisation because of the skills-biased nature of technological change; so, the challenge of the future lies in coping with rising inequality from technological change. The study also proposes a set of policy options for dealing with the employment effects of digitalisation.