New research from Germany, summarized in a CEPR column, shows that workers displaced from carbon-intensive sectors face larger and more persistent earnings losses than workers displaced from other sectors. The analysis uses administrative data from 1992 to 2020 and finds the gap comes from specialized skills, regional concentration of polluting industries, and higher firm wage premiums that are hard to match elsewhere. Because high-carbon sectors are clustered in specific regions, displaced workers often have few local options that use the same skills. Workers who moved to another local labor market had lower losses, but a mass move would hurt the communities left behind. The authors argue for targeted retraining and for policies that balance individual mobility with regional development.
