Publications & Documents

The green transformation of the economy is expected to lead to a sharp reduction in employment in carbon-intensive industries. For designing policies to support displaced workers, it is crucial to better understand the cost of job loss, whether there are specific effects of being displaced from a carbon-intensive sector and which workers are most at risk. By using German administrative labour market data and focusing on mass layoff events, we estimate the cost of involuntary job displacement for workers in high carbon-intensity sectors and compare it with the displacement costs for workers in low carbon-intensity sectors. We find that displaced workers from high carbon-intensity sectors have, on average, higher earnings losses and face stronger difficulties in finding a new job and recovering their earnings. Our results indicate that this is mainly due to human capital specificity, the regional clustering of carbon-intensive activities and higher wage premia in carbon-intensive firms. Workers displaced in high carbon-intensity sectors are older, face higher local labour market concentration and have fewer outside options for finding jobs with similar skill requirements. They have a higher probability to switch occupations and sectors, move to occupations that are more different in terms of skill requirements compared to the pre-displacement job, and are more likely to change workplace districts after displacement. Women, older workers and those with vocational degrees as well as workers in East Germany, experience particularly high costs in case they are displaced from high carbon-intensity sectors.

This paper provides empirical evidence on the short and long-term sectoral effect of environmental policy stringency on CO2 emissions, exploiting longitudinal data covering 30 OECD countries and more than 50 sectors. The analysis relies on the OECD Environmental Policy Stringency (EPS) index, a composite index tracking climate change and air pollution mitigation policies. Estimates obtained from panel regressions suggest that more stringent environmental policies are associated with lower emissions, that the effect builds over time and differs across sectors depending on their fossil fuel intensity. A one unit increase in the EPS index (about one standard deviation), is associated with 4% lower CO2 emissions in the sector with median fossil fuel intensity after two years and by 12% after 10 years. For sectors in the top decile of the fossil fuel intensity distribution, the estimates point to a decline in emissions by 11% after two years and 19% after ten years. Environmental policies targeted at energy, manufacturing and transport sectors have the largest potential impact on emissions. Illustrative policy scenarios based on these results indicate that achieving emission reductions consistent with net-zero targets will require raising the stringency of environmental policies more drastically and rapidly than in the past.

Immigration has increased rapidly since the late 1990s, driven largely by strong economic growth and high standards of living. By mid-2023, foreign citizens made up around 18% of the population. This has brought important economic benefits to Iceland, including by boosting the working age population and helping the country to meet labour demands in fast-growing sectors. However, there are important challenges regarding the integration of immigrants and their children that need to be addressed through a comprehensive approach, helping to make the most of immigration. Successful labour market integration of immigrants requires more effective language training for adults and an improvement in skills recognition procedures. At the same time, immigrants need more opportunities to work in the public sector and the adult learning system should be adjusted to better encompass their training needs. Strengthening language skills is key to improving the weak educational outcomes of immigrant students. Enhancing teachers’ preparedness to accommodate students’ diverse educational needs is another pre-requisite. Strengthening integration further hinges upon meeting the housing needs of the immigrant population, including through an increase in the supply of social and affordable housing.

The digital economy is growing, with producers increasingly using digital technology to revolutionise their production processes, and with new business models being created based on the digital transformation. To improve the visibility of digitalisation in macroeconomic statistics, the Digital Supply and Use Tables (SUTs) framework has been developed under the auspices of the OECD’s Informal Advisory Group (IAG) on Measuring GDP in a Digitalised Economy. In the Digital SUTs framework, three dimensions are introduced for measuring the digital economy: the nature of the transaction (the 'how'), the goods and services produced (the 'what'), and the new digital industries (the 'who'). The OECD Handbook on Compiling Digital SUTs explains these three dimensions and includes examples. It also presents the high priority indicators that have been agreed by the IAG and includes recommended templates for producing the outputs.

Stimulus packages adopted following the COVID-19 pandemic – such as the US Inflation Reduction Act and NextGenerationEU - have been presented as an opportunity to 'build back better' and accelerate the transition to a low-carbon economy while re-igniting the economy. But this revival of industrial policy has also raised concerns about the potential for a global green subsidy war. OECD analysed funding measures worth USD 1.3 trillion announced around the world in 2020-21 to support development and diffusion of low-carbon technologies. These measures can trigger substantial greenhouse gas emissions reductions while boosting the growth of the clean tech sector in all regions and reducing dependence over fossil fuel imports. This policy brief summarises key findings from our analysis and offers additional recommendations to policymakers.