'Green' Growth,
'Green' Jobs and Labor Markets

The term 'green jobs' can
refer to employment in a narrowly defined set of industries
providing environmental services. But it is more useful for
the policy-maker to focus on the broader issue of the
employment consequences of policies to correct environmental
externalities such as anthropogenic climate change. Most of
the literature focuses on direct employment created, with
more cursory treatment of indirect and induced job creation,
especially that arising from macroeconomic effects of
policies. The potential adverse impacts of green growth
policies on labor productivity and the costs of employment
tend to be overlooked. More attention also needs to be paid
in this literature to how labor markets work in different
types of economy. There may be wedges between the shadow
wage and the actual wage, particularly in developing
countries with segmented labor markets and after adverse
aggregate demand shocks, warranting a bigger and
longer-lasting boost to green projects with high labor
content. In these circumstances, the transition to green
growth and job creation can go hand in hand. But there are
challenges, especially for countries that have built their
industrial development strategies around cheap carbon-based
energy. Induced structural change, green or otherwise,
should be accompanied by active labor market policies.