Workers’ Earnings Losses Due to the Low-Carbon Transition. Theory and Application in a CGE Model

Witajewski-Baltvilks Jan (), Boratyński Jakub, Jeszke Robert and Pyrka Maciej
Additional contact information
Witajewski-Baltvilks Jan: The National Centre for Emissions Management, ul. Słowicza 32, 02-170 Warsaw, Poland
Boratyński Jakub: The National Centre for Emissions Management, ul. Słowicza 32, 02-170 Warsaw, Poland
Jeszke Robert: The National Centre for Emissions Management, ul. Słowicza 32, 02-170 Warsaw, Poland
Pyrka Maciej: The National Centre for Emissions Management, ul. Słowicza 32, 02-170 Warsaw, Poland

Central European Economic Journal, 2025, vol. 12, issue 59, 186-204

Abstract: Designing a just transition that leaves no one behind necessitates an understanding of the potential economic costs of this transition for particularly vulnerable individuals. In this article, we analyse the costs of transitioning from high-carbon to less-carbon-intensive sectors for workers. First, we discuss potential reasons for such costs. Second, we employ a microeconomic model to demonstrate that information on the magnitude of these costs can be derived from the empirically observed sectoral labour supply curves. We then illustrate how the system of supply curves can be integrated into a standard Computable General Equilibrium framework. We calculate the potential earnings losses incurred by workers during the transition and compare them to the size of the Just Transition Fund by the European Commission. Finally, we employ the model to estimate the transition costs for Poland. In 2040, the loss for workers due to climate policy is approximately $1 billion, equivalent to 0.5% of total labour compensation. The state could use a Just Transition Fund or allocate a portion of its carbon tax revenue to compensate for these losses, thus reducing the resistance of the most affected workers to more ambitious climate policies.

Keywords: Just transition; Computable General Equilibrium; Climate Change Mitigation; mining phase-out (search for similar items in EconPapers)
JEL-codes: E24 J24 Q43 Q52 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/ceej-2025-0012 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:ceuecj:v:12:y:2025:i:59:p:186-204:n:1012

DOI: 10.2478/ceej-2025-0012

Access Statistics for this article

Central European Economic Journal is currently edited by Anna Matysiak

More articles in Central European Economic Journal from Sciendo
Bibliographic data for series maintained by Peter Golla ().