Understanding labor market transitions in the Green Economy: A synthetic panel approach for Colombia

The green transition is expected to be one of the most significant forces shaping labor markets in the incoming years. As economies shift toward cleaner technologies, green jobs will expand, while employment in high-emission sectors will either decline or move into other sectors, depending on skill transferability and policy design. In this context, the ability of workers to transition between green and non-green jobs will be crucial to ensure a just labor market adjustment. Labor transitions into and out of green jobs remain understudied, particularly in developing economies where data constraints limit empirical analysis. This paper addresses this gap, using household survey data and a synthetic panel approach to estimate the probability of labor transitions employs a skills-based green index. The results reveal a high degree of labor market persistence, explained by the role of skills in shaping mobility, and show a wage premium of 10.6% for green occupations compared to their non-green counterparts. These findings have important policy implications for ensuring a just energy transition. Given the observed rigidities in green labor mobility, targeted upskilling and reskilling programs are important to enabling non-green workers to acquire the necessary skills for green jobs.