The diffusion of the information technology has led to the profound transformation of economies all over the world. Among other things, it has left a deep impact on the functioning of the labour market and people’s relationship to the world of work. This dissertation aims at qualifying the role of the labour market in the process of economic transformation induced by the introduction and diffusion of the information technology. The dissertation integrates the theoretical perspectives on the long-term economic development with the insights from the labour market studies into the evolutionary model of economic change that links the behavior of economic agents at the micro-level of the economy with the macro-level outcomes and determinants of this behaviour. Empirically, the dissertation investigates the co-evolutionary dynamics of industrial restructuring and worker reallocation across and within regional labour markets in Sweden in the period between 1985 and 2010. The findings of this dissertation indicate that the dynamics of technological change and its implications for functioning of the regional labour markets should be approached through the prism of technology diffusion process which unfolds in time and space.