The impact of climate change mitigation policies on European labour markets

Abstract

We study the impact of climate change mitigation policies intended to reach the Paris Agreement’s two-degree target on the structure of European labour markets. Employing a three-sector macro-econometric model with a rich labour market extension, we show that the measures targeted at shrinking the use of fossil fuels in electricity generation and the road transport sector – both of which have an overall modest, positive impact on GDP and total employment – could make occupational structure less unequal and polarised in 2030, the target deadline. This could occur in more than half of the European Union’s member states, particularly where the industries most affected by the transition to a low-carbon economy (i.e., mining and quarrying, utilities and manufacturing of coke and refined petroleum products) remain most important.