Paper short abstract:

We use macro and individual level data representing more than 1.7 billion workers to explore the labour market effects of a global energy transition on poverty. We find a small net job increase, and underline the need to ensure that new jobs created are decent to make Green Deals inclusive and just.

Paper long abstract:

The recently proposed Green Deals, as well as the "building back better" plans, underline the importance to make green transitions inclusive. This is particularly related to the labour market, which may be significantly impacted. Empirically, this issue has until now received limited attention as the relationship between poverty and climate change are explored mainly i) through the lenses of climate change adaptation, or ii) via the effects of rising energy prices on the purchasing power of poor households. We fill this gap by using results from a simulation of the global energy transition required to meet the 2-degree target. The simulation with a multi-regional input-output model finds that, overall, this transition results in a small net job increase of 0.3% globally, with cross-country heterogeneity. We complement this macro-level analysis with individual data representing more than 1.7 billion workers to draw implications of the effects on poverty through labour market outcomes. The few job losses will be concentrated in specific industries, while new jobs will be created in industries with relatively in-work poverty rates, such as construction. We show that high in-work poverty in the industries of interest, and especially in middle-income countries, is often associated with low skills and an insufficient reach of social protection mechanisms. We conclude that green transitions must ensure that the jobs created are indeed decent including fair wages, adequate working conditions, sufficient social protection measures, and accessible to the vulnerable and poorest households, to make Green Deals inclusive and just.