The impact of job displacement on earnings of workers in high-emission industries in Canada

As Canada and various other countries from the Organisation for Economic Co-operation and Development (OECD) transition towards a net-zero greenhouse gas (GHG) emission economy, there may be concerns about the implications on the jobs and, hence, the earnings of workers employed in GHG-intensive industries. To shed light on this issue, the OECD (2024a, 2024b) examined the impact of job displacement on the earnings trajectories of workers using matched employer–employee data across 14 OECD countries: Canada, Australia, Austria, Denmark, Estonia, Finland, Germany, Hungary, the Netherlands, Norway, Portugal, Spain, France and Sweden. The study, which Statistics Canada participated in, considered workers displaced from mass layoffs over the 2005-to-2013 period and their economic outcomes six years later. The study defined mass layoffs as a reduction in employment by at least 30% within a given enterprise. The analysis distinguished workers in “high-emission” industries from those in other industries and compared the earnings trajectories of displaced workers with those of their non-displaced counterparts with similar characteristics. The sample was restricted to paid workers aged 18 to 50 with at least two years of tenure before being laid off from enterprises in the commercial sector with at least 30 employees. The effect of job displacement on annual earnings was estimated using an event study model that accounted for differences in worker characteristics. The outcome of interest was annual earnings relative to pre-displacement earnings two years prior to job displacement. The Canadian Employer–Employee Dynamics Database was used for Canada, and these data classify industries according to the North American Industry Classification System. For international comparability, this classification system was converted to the International Standard Industrial Classification (ISIC) system.