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The Welfare Costs of Job Loss and Decarbonization: Evidence from Germany’s Coal Phaseout

Author

Listed:
  • Luke Haywood
  • Markus Janser
  • Nicolas Koch

Abstract

Job losses in fossil industries are often prominent in climate policy discussions. Why are job losses costly? Who is most affected? How can welfare costs be reduced? We present a simple job search model to calculate lifetime welfare costs of job loss. Based on the universe of German employment biographies, we apply the model to the archetypical fossil industry—coal mining. Contrary to public discourse, unemployment is a small factor in welfare costs of job loss, with wage differentials and job security much more important. Counterfactual policy simulations quantify the increase in welfare costs of faster decarbonization and potential benefits of bespoke labor market policies.

Suggested Citation

  • Luke Haywood & Markus Janser & Nicolas Koch, 2024. "The Welfare Costs of Job Loss and Decarbonization: Evidence from Germany’s Coal Phaseout," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 11(3), pages 577-611.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/726425
    DOI: 10.1086/726425
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    Cited by:

    1. Ordonez, Jose Antonio & Jakob, Michael & Steckel, Jan Christoph & Ward, Hauke, 2023. "India's just energy transition: Political economy challenges across states and regions," Energy Policy, Elsevier, vol. 179(C).
    2. Federico Fabio Frattini & Francesco Vona & Filippo Bontadini & Italo Colantone, 2025. "The Local Job Multipliers of Green Industrialization," Working Papers 2025.13, Fondazione Eni Enrico Mattei.
    3. Deiana, Claudio & Giua, Ludovica, 2023. "This site is closed! The effect of decommissioning mining waste facilities on mortality in the long run," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    4. Frattini, Federico Fabio & Vona, Francesco & Bontadini, Filippo & Colantone, Italo, "undated". "The Local Job Multipliers of Green Industrialization," FEEM Working Papers 358792, Fondazione Eni Enrico Mattei (FEEM).
    5. Luis Fernández Intriago & Sharan Burrow & Shouvik Chakraborty & Reza Daniels & Alan Finkelstein Shapiro & Helena Garcia & Raphael Heffron & Michael Jakob & Markus Janser & Suzi Kerr & Catherine Leinin, 2025. "Overcoming five key challenges to make the energy transition a just labor transition," Nature Communications, Nature, vol. 16(1), pages 1-3, December.
    6. Cloé Garnache & Elisabeth Isaksen & Maria Nareklishvili, 2025. "Labor Market Impacts of the Green Transition: Evidence from a Contraction in the Oil Industry," CESifo Working Paper Series 12057, CESifo.
    7. Bachmann, Ronald & Janser, Markus & Lehmer, Florian & Vonnahme, Christina, 2024. "Disentangling the greening of the labour market: The role of changing occupations and worker flows," Ruhr Economic Papers 1099, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Raimi, Daniel & Greenspon, Jacob, 2025. "Finding the Right Fit: What Jobs Offer a Good Match for Fossil Fuel Workers’ Skills?," RFF Working Paper Series 25-06, Resources for the Future.
    9. Bachmann, Ronald & Eßer, Jana & Fitzthum, Mirjam & Vonnahme, Christina, 2024. "Die ökologische Transformation des Arbeitsmarktes: Individuelle Betroffenheit und Erwartungen," RWI Materialien 170, RWI - Leibniz-Institut für Wirtschaftsforschung.
    10. Rud, Juan-Pablo & Simmons, Michael & Toews, Gerhard & Aragon, Fernando, 2024. "Job displacement costs of phasing out coal," Journal of Public Economics, Elsevier, vol. 236(C).
    11. Bruns, Daniel & Thomsen, Stephan L., 2025. "The Impact of Germany's Coal Phase-Out on Local Property Values," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325450, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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