April 22, 2015

How are you marking Earth Day?

Today marks Earth Day, which is celebrated around the world to encourage public and governmental support for environmental programs.

Earth Day was first marked in 1970 in the US, and is widely believed to have kick-started the modern environmental movement. Around 20m Americans took part in rallies across the country, which led to the creation of the United States Environmental Protection Agency.

Issues related to climate change or fossil fuels continue to spark public debate, and designing effective energy policies which benefit the environment, workers, and firm productivity remains a difficult task.

Olivier Deschenes discusses how environmental regulations really affect labor markets in his article for IZA World of Labor. He acknowledges that regulations generally impose additional production costs which can have a negative impact on industry employment and worker earnings; however, he says that these private costs are small relative to the social and health benefits that these regulations can bring. Healthier working environments can in turn boost worker productivity.

Nonetheless, Deschenes suggests that new or stricter environmental regulations which affect labor markets should be accompanied by job training, income support, and labor market reintegration programs to mitigate the effects of worker displacements.

Nico Pestel also writes about how green energy policies can affect employment, noting positive and negative impacts. Green energy policies will create new jobs in renewable sectors, though this of course will reduce employment in less green industries. In addition, energy prices may increase with higher feed-in tariffs and subsidies, which may in turn reduce the purchasing power of private households.

Nonetheless, empirical evidence shows that job creation and job destruction tend to cancel each other out, and so should not be considered in the energy policy debate.

In order to develop successful policies, decision makers need to be aware of the connection between environmental regulations, labor markets, and industrial activity. On Earth Day this year, we’ll be reflecting on how we can use empirical research to help us create a clean, diverse, and productive world for generations to come.

Read more here.

Related articles:
Environmental regulations and labor markets, by Olivier Deschenes
Employment effects of green energy policies, by Nico Pestel