Job losses and the political acceptability of climate policies : an amplified collective action problem

Political acceptability is an essential issue in choosing the appropriate climate policy. Sociologists and behavioral scientists recognize the importance of selecting environmental policies that have broad political support, while economists compare different instruments first based on their efficiency and then by assessing their distributional impacts and thus the political acceptability of such policies. I argue that the large economic losses potentially ascribed to climate policies, especially job losses, can have substantial impacts on the willingness to vote for these policies. In aggregate, the costs of these losses are significantly smaller than the benefits; both in terms of health and labor market outcomes, but the losses are concentrated in specific areas, sectors and social groups that are already exposed to other shocks, such as automation and trade shocks. This setting conjures a collective action problem that is amplified by declining political participation, de-unionization and localized contextual effects. Key policy insight: ■ Climate policies are perceived as extremely harmful for employment because of their high incidence on communities and sectors that already damaged by other shocks. ■ Excessive levels of labour market inequalities are detrimental for the political acceptability of climate policies, thus fighting inequality can have beneficial effects for climate change. ■ Policymakers should be more careful in distinguishing between small and large distributional effects of climate policies, and their consequences on their political acceptability