Abstract

The process of decarbonization can have a significant impact on labor markets, which can result in both positive and negative effects on the welfare of individuals and communities. In this context, targeted active labor market policy measures have the potential to maximize the positive effects on welfare and to limit the negative effects. This requires the development of indicators that help to identify employees, firms, sectors, and regions that are affected by decarbonization as precisely as possible. In contrast to automation and trade shocks, empirical metrics are still very limited. In particular, there is still nothing such a "Carbon Footprint of Jobs" at individual level to assess the impact on labour markets with regard to decarbonization. In this paper, we want to investigate the labor market effects of the green transition. More specifically, we want to quantify the occupation level heterogeneity of the firm-average carbon footprint of jobs. In line with the trade shock literature, we will then use the differences in shares of jobs affected in a region for plausibly exogenous variation. We match high-quality IAB data with several sources of emissions data to compute the firm-level carbon footprint of jobs (CFJ), the carbon profile of occupations (CPO) and related measures. Similar to the `ecological footprint' measuring the individual emissions of one consumer, the CFJ measures the emissions of an individual job expressed as the average emissions per employee of the establishment. Using these metrics, we can learn which occupations are most affected, and how severely (how many and what alternatives employees have to switch job); that if, within one occupation, the CPO declines rapidly, employees can relatively easily change to low carbon intensive firms; which sectors or regions are most affected (where sectoral labor market policies or regional/structural policy might need to intervene); and that if, within one sector, the CPO declines rapidly, then there are likely very different levels of carbon-intensity for different technologies deployed. The findings can eventually be used to design and improve welfare-enhancing active labor market policies.