A green wage premium?

Godøy, Anna and Isaksen, Elisabeth ORCID: 0000-0002-6557-8001 (2025) A green wage premium? Grantham Research Institute on Climate Change and the Environment Working Papers (432). Grantham Research Institute on Climate Change and the Environment, London, UK.

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Abstract

Many governments have set ambitious climate goals that require a shift away from fossil fuel-intensive industries toward climate-neutral jobs. We use rich administrative register data to estimate green wage premiums in the presence of nonrandom sorting of workers across firms. On average, green firms pay statistically significant and economically meaningful wage premiums, consistent with a pattern of rent-sharing in high-revenue, highly innovative green firms. The premium is larger for non-college workers and those in low-skilled occupations. However, the average estimated wage premium for high-carbon firms is roughly twice as large as the green wage premium. This finding suggests that while the expansion of high-wage green firms may help mitigate the earnings losses associated with decarbonization, it is unlikely to fully offset them.

Item Type:	Monograph (Working Paper)
Additional Information:	© 2025 The Author(s)
Divisions:	Grantham Research Institute
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > HC Economic History and Conditions
JEL classification:	J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J21 - Labor Force and Employment, Size, and Structure Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Costs; Distributional Effects; Employment Effects Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q55 - Technological Innovation
Date Deposited:	05 Dec 2025 16:03
Last Modified:	08 Dec 2025 16:54
URI:	http://eprints.lse.ac.uk/id/eprint/130458

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