The Invisible Green Thumb: Examining the Impact of Climate Action Plans on U.S. Labor Markets

Abstract

This thesis delves into the topic of the implications of state climate action plans and their impact on the labor market, while taking into account the segmentation of industries by their level of “dirtiness”. Generally, a climate action plan implemented by a state involves an emissions reduction target, incentives to facilitate cooperation by polluting facilities, and a plan of action to transition to an economy that is partially, or fully, dependent upon renewable energy. The existing literature surrounding the topic provides a wealth of information regarding climate change, climate legislation, and emissions, on separate accounts. However, my contribution to this literature is the union of the three interconnected realms that indicates the occurrence of a labor reallocation from “dirty” industries to “clean” industries. I utilized data from the Toxics Release Inventory, the Bureau of Labor Statistics, the Center for Climate and Energy Solutions, and the Bureau of Economic Analysis to create my full dataset and compose a two-way xed e ect study. I found that there indeed exists an e ect of the existence of a climate action plan within a state on employment in both “clean” and “dirty” industries. In regards to wages, however, no substantial e ect of the presence of a climate action plan can be concluded. Thus, we are able to deduce that a labor reallocation takes place as a result of a negative supply shock and negative demand shock in “dirty” industries, and a positive supply shock and positive demand shock in “clean” industries.