A Greener Labor Market: Employment, Policies, and Economic Transformation
Marina M. Tavares

Abstract:

Thegreeneconomic transformation needed to achieve net zero emissions will also require changes in employment. This chapter examines the labor market implications of this transition, using a mix of empirical and model-based analyses Looking at a large sample of countries, the empirical analysis indicates that both greener and more polluting jobs are concentrated among smaller subsets of workers. Individual workers face tough challenges in moving to greener jobs from more pollutionintensive jobs, complicating the labor reallocation. Higher skills make job transitions easier, highlighting the potential importance of training. Stronger environmental policies help green the labor market and appear more effective when reallocation incentives are not blunted. Finally, a policy package incorporating a green infrastructure push, phased-in carbon prices, and targeted training and an eamed income tax credit to provide income support and incentivize labor supply, could put an economy on a path to net zero emissions by 2050 with an inclusive transition. Model simulations for a representative advanced economy suggest that about 1 percent of employment would shift toward greener activities over a 10-year period. By contrast, for a representative emerging market economy, about 2.5 percent of employment would shift, reflecting differences in workforce skills and greater reliance on higher-emissions-intensive production Delays in policy actions will require sharper labor market adjustments to achieve net zero emissions.

Speaker:

Marina M. Tavares is an Economist in the Structural Reforms Unit of tie IMFs Research Department. Before joining RES, Marina led the working group on the interconnections between macroeconomic policy and inequality under FCDO-IMF Collaboration. Her research interests include macroeconomics, climate change, gender, and inequality. Before joining the Fund, Ms. Tavares worked as an assistant professor at Instituto Tecnologico Autonomo de Mexico (ITAM), and she holds a Ph.D. in Economicsfrom the University of Minnesota.