Jobs creation and environmental protection: two sides of the same coin

November, 20th: a global relief is felt right after Biden’s victory in Georgia, which officializes his ascent to the White House. The news is accompanied by the willingness of the U.S. to re-join Paris agreement, whose objectives were not ratified by the forty-fifth President, Donald Trump. Considering U.S. as the world’s second-largest emitter of GHGs, the choice of bringing the U.S. into climate’s target re-alignment is crucial for the States’ benefits. Furthermore, this choice sends a strong message to the Europe’s international community, particularly to countries such as Poland, which still struggles in understanding the need to transform its internal and coal-dependent economy into a more-sustainable one. Recent development of the EU Green Deal involved the decision of the Union’s Heads of State and government to cut down emissions by 40-55% by 2030 and, hence, regarding the 2050-scheduled-carbon-neutral objective as more reachable.

Several reasons may be presented to justify the ambition of the Green Deal’s supporter member states. One of the most important is to nudge economic growth towards a greener path: but if so, how and through which channel would green economy affect economic growth?

In this framework, a central role is played by green jobs or, more generally, by the phenomenon of green employment. First and foremost, it is essential to follow the “income approach” in defining GDP which is equal to the amount of total income earned by all the production factors (labor and capital) within the domestic boundaries of a given country. Hence, each exogenous shock which is capable to positive affect employment and productivity should be considered as a benefit for a social and economic system.

Many studies have confirmed the positive correlation between green policies implementation and employment rate, but which are the mechanisms characterizing such process?  

The International Organization of Labor states that the scope of the term “green jobs” covers direct employment in sectors reducing the negative impact on the environment leading to the development of environmentally, socially and economically sustainable enterprises and economies. This broad definition allows us to map the structure of labor market with respect to green and non-green job-categories and to better comprehend the related dynamics.

According to Bowen et al., “Green jobs” include three job-subcategories: Green Increased Demand (GID) – existing jobs that are expected to be in high demand due to greening, but do not require significant changes in tasks and skills; Green Enhance Skills (GES) – existing jobs that require significant changes in tasks, skills, and knowledge as a result of greening; Green New and Emerging (GNE) – unique jobs created to meet the new needs of a greener economy. “Non green jobs” are composed by Green Rival and Others, whereas Green Rival and green jobs differ in only few specific aspects and Others are occupations which are not affected by the process of greening. In this framework, green policies can change the labor market turning Green Rival into GDI in the short term, while they implement the creation of GES and GNE in the long run.

Focusing on the demand of the labor market, Cecere and Mazzanti have analyzed a large sample of European SMEs recognizing a positive correlation between green subsidies and the demand of green jobs by such enterprises in the short term. Another econometric study conducted by Hongtao Yi has demonstrated that green jobs employment retention characterizes the labor market long-term dynamics of the of US metropolitan areas that have implemented clean energy policies over the previous two decades.

A specific sector needs to be mentioned: Renewable Energy Sources (RES). In fact, this specific playfield is under the lenses of labor economists since long time ago because it presents some peculiar and very positive features. Firstly, as demonstrated by Consoli  et al., fossil fuel industry jobs present many important similarities in tasks with green jobs in the RES sector. Furthermore, this green industry is more labor-intensive than fossil-fuel one. The last specific aspect of RES is related to their redistributive effects within a social system: taking a closer look on European regions, it is observable that the poorest regions coincide with the most polluted ones, furtherly characterized by high presence of carbon industries (Poland, Hungary, Czech Republic and others). Dvorak et al. have expressed two specific effects of RES implementaion in such countries: the GHG emission decrease and the employment rate increase, especially in the poorest rural areas of these regions, highlighting the social potential of RES in the greening process.

Through such an analysis it is easily comprehensible that green employment is capable to relax the political constraints imposed by the green economy in the short-term. Policy-makers should consider these opportunities in choosing which vision to embrace in their economic, social and environmental approach, especially if they are highly exposed in the international politics arena.

This article has been written in collaboration with Massimiliano del Forno (MSc Student in Resource Economics and Sustainable Development, Alma Mater Studiorum – Università di Bologna).

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