Estimating the Green Wage Premium

Wenjing Kuai, Robert J. R. Elliott (), Toshihiro Okubo and Ceren Ozgen ()
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Wenjing Kuai: Hunan University
Robert J. R. Elliott: University of Birmingham
Ceren Ozgen: University of Birmingham

No 17878, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: To address climate change concerns, Japan is accelerating the greening of its economy. In this paper we analyze the characteristics of the workers that are contributing to the green transition and estimate the so-called green wage premium. Using propriety data from a recent worker-level survey for Japan, we provide a continuous measure of the degree to which a job can be considered green and document how green jobs are different from non-green jobs by sector, occupation and different demographics. Our structural model estimates of a green wage premium show that the hourly wage of green workers is 7.3% higher on average than non-green work- ers. A 10% increase in the green intensity of a job is shown to increase average hourly wages by 0.8%. Decomposition results suggest that the explainable part of the wage premium is largely due to task differences, gender disparities (in lower percentiles), and occupation. The unexplained part of the green wage premium are found mainly in high-paying green jobs where certain characteristics appear to be better rewarded, possibly driven by supply and demand imbalances.

Keywords: Japan; wage gap; employment; green jobs; green transition; climate change (search for similar items in EconPapers)
JEL-codes: J24 J31 Q50 Q52 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-lma and nep-tid
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