E C O N O M I C R E P O R T O F T H E P R E S I D E N T

the economic opportunities made possible by innovations in computers,communications technology, and the Internet and e-commerce.In telecommunications, technological and regulatory changes have led to asurge in demand for communications equipment and services. Many of thesenew products, in turn, are critical inputs into the information technologyindustry. Firms are adopting information technology to lower costs, createnew products, and improve their productivity. By improving informationflows within the firm and between the firm and its customers, informationtechnology has the potential to revolutionize how businesses conductbusiness in this century. E-commerce could fundamentally reshape thenature of relationships between businesses and their customers, and betweenbusinesses and businesses.The Administration has acted as a catalyst for this growth by supporting thebasic and applied research necessary for creating new technologies. It has alsosupported regulatory reforms, like the 1996 Telecommunications Act, thatencourage competition and entry from new providers and new technologies.The future challenge is to sustain and increase this stimulus by increasinginvestment in R&D and encouraging competition and innovation.Promoting Skills, Education, and DevelopmentChapter 4 examines the implications for the labor market of an increasinglytechnology-driven economy. The chapter focuses on two key transformations ofthe labor market: the increasing value of education and the improved opportunitiesfor women, minorities, and persons with disabilities. The last severaldecades have seen a substantial gap emerge between the earnings of those witha college education and of those with less education, even though the averagelevel of educational attainment has risen over the century. The economy hasclearly put a high premium on a new set of skills, and despite the progress thathas been made, there remains for some workers a mismatch between the skillsthey possess and the skills that firms demand.Chapter 4 also examines the role of government and the policies put forthby this Administration to help workers adjust to the rapidly changing economy.The chapter includes a discussion of education policies from preschoolto postsecondary, and of private and government training programs. Thechapter presents evidence on the effectiveness of these training programs inimproving the achievement levels of students as well as the labor marketoutcomes of various groups of workers. The evidence suggests which types ofprograms might be most successful and cost-effective at improving the skillsof workers in the future.The challenge in this area is to develop a comprehensive set of educationand training policies that create a framework of lifetime learning withinwhich workers can acquire and maintain the skills they need to be successfulChapter 1 | 43