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Local Labor Market Impacts of the Energy Transition: Prospects and Policies

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  • Gordon H. Hanson

Abstract

Society’s transition toward more sustainable energy sources is well underway. But substantially reducing the use of fossil fuels to generate electricity, to power vehicles, and to manufacture the stuff of everyday life will profoundly disrupt the communities that currently dedicate themselves to carbon-intensive industries. In this paper, I consider the potential for adverse labor market consequences from the energy transition and the suitability of existing policies to counteract them. Top of mind in this discussion is to avoid repeating the painful adjustment to globalization and automation, which in recent decades brought concentrated job loss and long-lasting economic distress to local labor markets that had been specialized in manufacturing. I begin by mapping the spatial distribution of employment in fossil-fuel-intensive activities across US commuting zones from 2000 forward. Then, using the labor market consequences of the post-1980 decline of coal as a backdrop, I discuss policy options for easing adjustment to the energy transition, including letting market forces work, reinforcing the social safety net, and expanding place-based policies.

Suggested Citation

  • Gordon H. Hanson, 2023. "Local Labor Market Impacts of the Energy Transition: Prospects and Policies," NBER Working Papers 30871, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30871
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    Cited by:

    1. Gazmararian, Alexander F., 2024. "Fossil fuel communities support climate policy coupled with just transition assistance," Energy Policy, Elsevier, vol. 184(C).
    2. Bluedorn, John & Hansen, Niels-Jakob & Noureldin, Diaa & Shibata, Ippei & Tavares, Marina M., 2023. "Transitioning to a greener labor market: Cross-country evidence from microdata," Energy Economics, Elsevier, vol. 126(C).
    3. Josh Blonz & Brigitte Roth Tran & Erin E. Troland, 2023. "The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels," NBER Working Papers 31072, National Bureau of Economic Research, Inc.
    4. Fu, Tong & Li, Zijun & Qiu, Zhaoxuan & Tong, Xinle, 2024. "The policy gap between finance and economy: Evidence from China's green finance policy," Energy Economics, Elsevier, vol. 134(C).

    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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