Labor Market Impacts of the Green Transition: Evidence from a Contraction in the Oil Industry

Cloé Garnache, Elisabeth Isaksen and Maria Nareklishvili

No 12057, CESifo Working Paper Series from CESifo

Abstract: The transition to a low-carbon economy requires a contraction of fossil fuel sectors, raising questions about the labor market costs of reallocation. We study the 2014 oil price shock as a natural experiment to examine the contraction of Norway’s oil industry. Using matched employer–employee data, we estimate long-run effects on earnings and employment using two complementary approaches. A difference-in-differences design shows moderate losses for all oil workers, while an event study reveals substantially larger and more persistent losses among displaced workers—up to 10% in earnings and 5% in employment nine years after displacement, especially for those with lower educational attainment. Although few displaced workers transition into green jobs, they are equally likely to enter green and brown (non-oil) sectors when accounting for the size of each destination sector. Earnings losses are larger for those entering green jobs rather than brown (non-oil) jobs, but smaller than for those entering other sectors. Decomposition results indicate that differences in establishment wage premiums—rather than skill mismatch—explain most of the observed gaps.

Keywords: green transition; oil industry; job displacement; distributional effects; establishment wage premium; skills mismatch (search for similar items in EconPapers)
JEL-codes: J24 J63 Q32 Q52 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-lma and nep-tid
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo1_wp12057.pdf (application/pdf)

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:ces:ceswps:_12057

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().