Disentangling the greening of the labor market: The role of changing occupations and worker flows

The decarbonization of the economy has important consequences for the labor market and has also ignited fears of unemployment and job loss. These fears could lead to resistance against decarbonization. Yet, relatively little is known about the associated adjustment of the labor market. We therefore explore the growth in the greenness of employment in Germany between 2012 and 2022 using a text-mining approach applied to task descriptions of occupations together with the universe of worker-level administrative data. We demonstrate that employment has become greener over time, and that the greening of occupations over time (“within-effect”) is at least as important for the overall greening of employment as shifting occupational employment shares (“between-effect”). Furthermore, we show that the decrease in the share of brown tasks in brown occupations and the increase in the share of green tasks in green occupations contribute most to the within-effect. As for the between-effect, worker flows to and from non-employment are a major factor, direct worker flows from brown to green occupations do not play an important role. Finally, we find that foreign and low-skilled workers are most at risk from the green transition. These findings highlight that facilitating on-the-job training and targeted support for vulnerable groups is essential to ensure an inclusive and efficient decarbonization of the economy.