Emphasis on structural change as an essential element of long-run growth in capitalist economies since the Industrial Revolution is a main characteristic of Pasinetti’s scientific work. Technical progress is the main driver of structural change and economic growth.Pasinetti integrates structural change in economic analysis by considering the double-sided nature of technical change and the interaction between the supply side (growing productivity) and the demand side (increasing per-capita income) and the evolving structural dynamics of employment and consumption. The analysis is conducted on the basis of vertically integrated sectors which may differ in the growth rates of productivity and demand. In order to maintain full employment over time, an effective demand condition and a capital accumulation condition must be satisfied. In his modern theoretical analysis of Ricardo’s machinery problem Pasinetti shows that a continuous process of structural change is a precondition to avoid technological unemployment. Furthermore, full employment has to be actively pursued by an economic policy raising effective demand and promoting research and development thus combining the insights of Keynes and Schumpeter.