The author examines how real or perceived job losses from climate policies impact the willingness of workers to support these policies and identifies countervailing policies for decisionmakers to consider.
Economic diversification/restructuring > Industry and/or sector assistance or plans
Employment > Job creation and/or equality, Other
collective action problem
Academic/research institution or journal
This paper examines the political acceptability of climate policies and the prevalence of the argument that these policies kill jobs. The author argues that the aggregate losses from climate policies are significantly smaller than the benefits, in terms of health and labor market outcomes. Using case studies and empirical evidence, the author maintains that the “job-killing” argument is exacerbated by a collective action problem. Individuals who are modestly “winning” have little motivation to organize to support climate policies, while those most negatively impacted are more likely to rally against these policies. Concerns for jobs tend to outweigh climate change concerns, especially in the face of extreme negative economic shocks.
The author identifies several factors that amplify the prominence of the “job-killing” argument in affected communities. In addition to the financial crisis and the increase of international competition from China, the geographic concentration of affected workers in the same area is also a key factor. The author also highlights political factors, such as the weakening of unions, which has led to job quantity being prioritized over job quality.
The author suggests that decisionmakers should consider implementing countervailing policies that minimize the collective action problem resulting from negative economic shocks. The author uses examples to suggest some possible policies. These include using lump-sum transfers to affected workers and their communities as a means to increase the political acceptability of climate policies and revenues from a carbon tax being either used to finance workers’ retraining programs or recycled to reduce labor taxation.
Social and/or cultural impacts > Non-financial loss, Pride or cultural identity
strategic and regional planning
just transition diagnostic
European Bank for Reconstruction and Development (EBRD)
Development finance institution
This paper examines how the European Bank for Reconstruction and Development (EBRD) will support progress in the economies where it invests. The paper outlines the aims, rationale, and broad approach to implementation of the EBRD’s just transition initiative, which aims to help the bank’s regions share the benefits of a green economic transition and to protect vulnerable countries, regions, and people from falling behind. The initiative builds on the EBRD’s experience of fostering transition toward sustainable, well-functioning market economies and focuses on the link between the green economy and economic inclusion. Working with national and regional authorities, EBRD clients, and other partners, the initiative emphasizes policy and commercial financing interventions that support a green transition while also assisting workers (particularly those whose livelihoods are linked to fossil fuels) in accessing new opportunities.
The paper includes an overview of the EBRD’s emerging just transition diagnostic and metrics for screening investments. This approach helps the bank screen certain regions and industries for vulnerabilities, assess the potential for various investments to advance just transition objectives and the bank’s core goals, and develop a set of policies and investment activities. This framework is especially useful in demonstrating how development finance institutions can link individual investments with broader regional plans, including in place-based investment.