Editing IPCC:AR6/WGIII/Chapter-4 (section)

==== 4.2.6.3 Mitigation and Employment in the Short- and Medium-term ====

<div id="h3-27-siblings" class="h3-siblings"></div>

Numerous studies have analysed the potential impact of carbon pricing on labour markets. [[#Chateau--2018|Chateau et al. (2018)]] and [[#OECD--2017a|OECD (2017a)]] find that the implementation of green policies globally (defined broadly as policies that internalise environmental externalities through taxes and other tools, shifting profitability from polluting to green sectors) need not harm total employment, and that the broad skill composition (low, high- and medium-skilled jobs) of emerging and contracting sectors is very similar, with the largest shares of job creation and destruction at the lowest skill level. To smoothen the labour market transition, they conclude that it may be important to reduce labour taxes, to compensate vulnerable households, and to provide education and training programs, the latter making it easier for labour to move to new jobs. Consistent with this, other studies that simulate the impact of scenarios with more or less ambitious mitigation policies (including 100% reliance on renewable energy by 2050) find relatively small (positive or negative) impacts on aggregate global employment that are more positive if labour taxes are reduced but encompass substantial losses for sectors and regions that today are heavily dependent on fossil fuels (Arndt et al. 2013; [[#Huang--2019|Huang et al. 2019]] ; [[#Vandyck--2016|Vandyck et al. 2016]] ; [[#Jacobson--2019|Jacobson et al. 2019]] ). Among worker categories, low-skilled workers tend to suffer wage losses as they are more likely to have to reallocate, something that can come at a cost in the form of a wage cut (assuming that workers who relocate are initially less productive than those who already work in the sector). The results for alternative carbon revenue recycling schemes point to trade-offs: a reduction in labour taxes often leads to the most positive employment outcomes while lump-sum (uniform per-capita) transfers to households irrespective of income yield a more egalitarian outcome.

The results from country-level studies using CGE models tend be similar to those at global level. Aggregate employment impacts are small and may be positive especially if labour taxes are cut, see for example, [[#Telaye--2019|Telaye et al. (2019)]] for Ethiopia,( [[#Kolsuz--2017|Kolsuz and Yeldan (2017)]] for Turkey, [[#Fragkos--2017|Fragkos et al. (2017)]] for the EU, and [[#Mu--2018b|Mu et al. (2018b)]] for China. On the other hand, sectoral reallocations away from fossil-dependent sectors may be substantial, see for example, Alton et al. (2014) for South Africa or [[#Huang--2019|Huang et al. (2019)]] for China. Targeting of investment to labour-intensive green sectors may generate the strongest employment gains, see, for example, [[#Perrier--2018|Perrier and Quirion (2018)]] for France, [[#van%20Meijl--2018|van Meijl et al. (2018)]] for the Netherlands, and Patrizio et al. 2(018) for the USA. Changes in skill requirements between emerging and declining sectors appear to be quite similar, involving smaller transitions than during the IT revolution ( [[#Bowen--2018|Bowen et al. 2018]] ).

In sum, the literature suggests that the employment impact of mitigation policies tends to be limited on aggregate, but can be significant at the sectoral level ( ''medium evidence'' , ''medium agreement'' ) and that cutting labour taxes may limit adverse effects on employment ( ''limited evidence'' , ''medium agreement'' ). Labour market impacts, including job losses in certain sectors, can be mitigated by equipping workers for job changes via education and training, and by reducing labour taxes to boost overall labour demand ( [[#Stiglitz--2017|Stiglitz et al. 2017]] ) ( [[#4.5|Section 4.5]] ).

Like most of the literature on climate change, the above studies do not address gender aspects. These may be significant since the employment shares for men and women vary across sectors and countries.

<div id="4.2.6.4" class="h3-container"></div>

<span id="mitigation-and-equity-in-the-near-and-mid-term"></span>