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Environmental regulation and the labor market

Climate change and air pollution are major environmental issues which affect us all. Rising global temperatures will change how people choose to allocate their time between work and leisure, which has implications for people’s well-being and socio-economic inequalities. Whereas higher levels of air pollution reduce workers’ productivity and adversely affect children’s educational outcomes.

Regulations like green energy policies or air quality standards can lead to notable improvements in ambient air quality and to related health benefits. However, they can also impose additional production costs on firms, especially in sectors exposed to trade and intensive in labor and energy. However, the benefits of such environmental regulations are likely to outweigh any costs.

  • Employment effects of green energy policies Updated

    Does a switch in energy policy toward more renewable sources create or destroy jobs in an industrial country?

    Nico Pestel, December 2019
    Many industrial countries are pursuing so-called green energy policies, which typically imply the replacement of conventional fossil fuel power plants with renewable sources. Such a policy shift may affect employment in different ways. On the one hand, it could create new and additional “green jobs” in the renewables sector; on the other hand, it could crowd out employment in other sectors. An additional consideration is the potential increase in energy prices, which has the potential to stifle labor demand in energy-intensive sectors and reduce the purchasing power of private households.
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  • The impact of energy booms on local workers

    Energy booms create widespread short-term benefits for local workers, but appropriate policy requires consideration of a broad array of factors

    Grant D. Jacobsen, November 2019
    One of the primary considerations in policy debates related to energy development is the projected effect of resource extraction on local workers. These debates have become more common in recent years because technological progress has enabled the extraction of unconventional energy sources, such as shale gas and oil, spurring rapid development in many areas. It is thus crucial to discuss the empirical evidence on the effect of “energy booms” on local workers, considering both the potential short- and long-term impacts, and the implications of this evidence for public policy.
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  • Environmental regulations and labor markets Updated

    Balancing the benefits of environmental regulations for everyone and the costs to workers and firms

    Olivier Deschenes, November 2018
    Environmental regulations such as air quality standards can lead to notable improvements in ambient air quality and to related health benefits. But they impose additional production costs on firms and may reduce productivity, earnings, and employment, especially in sectors exposed to trade and intensive in labor and energy. Growing empirical evidence suggests that the benefits are likely to outweigh the costs.
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  • Climate change and the allocation of time

    In various ways, climate change will affect people’s well-being and how they spend their time

    Marie Connolly, January 2018
    Understanding the impacts of climate change on time allocation is a major challenge. The best approach comes from looking at how people react to short-term variations in weather. Research suggests rising temperatures will reduce time spent working and enjoying outdoor leisure, while increasing indoor leisure. The burden will fall disproportionately on workers in industries more exposed to heat and those who live in warmer regions, with the potential to increase existing patterns of inequalities. This is likely to trigger an adaptation, the scope and mechanisms of which are hard to predict, and will undoubtedly entail costs.
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  • Air pollution, educational achievements, and human capital formation

    Exposure to elevated levels of air pollution adversely affects educational outcomes

    Sefi Roth, August 2017
    The link between air pollution and human health is well-documented in the epidemiology and economic literature. Recently, an increasing body of research has shown that air pollution—even in relatively low doses—also affects educational outcomes across several distinct age groups and varying lengths of exposure. This implies that a narrow focus on traditional health outcomes, such as morbidity and mortality, may understate the true benefit of reducing pollution, as air pollution also affects scholastic achievement and human capital formation.
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  • Air pollution and worker productivity

    Higher levels of air pollution reduce worker productivity, even when air quality is generally low

    Matthew Neidell, June 2017
    Environmental regulations are typically considered to be a drag on the economy. However, improved environmental quality may actually enhance productivity by creating a healthier workforce. Evidence suggests that improvements in air quality lead to improvements in worker productivity across a range of sectors, including agriculture, manufacturing, and the service sectors. These effects also arise at levels of air quality that are below pollution thresholds in countries with the highest levels of environmental regulation. The findings suggest a new approach for understanding the consequences of environmental regulations.
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