Cars and the Green Transition: Challenges and Opportunities for European Workers

Oya Celasun, Galen Sher, Petia Topalova and Jing Zhou

No 2023/116, IMF Working Papers from International Monetary Fund

Abstract: Reducing transport sector emissions is an important pillar of the green transition. However, the transition to electric vehicles (EV) portends major changes in vehicle manufacturing activity, on which many livelihoods in Europe depend. Using the heterogeneity across European countries in the speed of transition to EV production and variation in sectoral and regional exposure to the automotive sector, this paper offers early evidence of the labor market implications of the EV transition. Our results suggest that the transformation of the auto sector is already having an adverse impact on employment in the affected sectors and regions, which can be expected to grow at least in the near term. Many of the affected workers will be able to retire and our analysis suggests that those who will have to transition to new “greener” jobs have a fair chance to do so when compared to other workers in the manufacturing sector. Furthermore, we find evidence that active labor market policies, specifically training, can help to reduce the adjustment costs for the affected workers.

Keywords: Electric vehicle; employment; green transition; labor market policy; EV production; EV transition; labor market outcome; electric vehicle charging station; transition to electric vehicles; Exports; Employment rate; Labor markets; Automobile industry; Europe; Global (search for similar items in EconPapers)
Pages: 32
Date: 2023-06-02
New Economics Papers: this item is included in nep-ene, nep-env, nep-tre and nep-ure
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