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Labour Demand Composition and Wage Responses in a Transition to a Clean Economy : A Case Study on the EU ETS

This thesis studies the effect on labour demand of a transition from an unconstrained economy featuring a ’clean’ and a ’dirty’ production method towards a fully clean economy, using a simplified General Equilibrium model. This model is calibrated to the European Union Emission Trading System (EUETS) and features a linear decline in a cap placed on the dirty production method. After simulating the trajectory set by the EU ETS, this study finds that wages are expected to increase by 11.68% over the transition period in the baseline scenario. This result is found to hold qualitatively both for steeper transitions and wide ranges of the elasticity of substitution and consumer preference in consumption, as long as clean productivity growth is sufficientand the consumer is either indifferent or favours the clean consumption good. The minimum level of clean productivity growth needed to achieve a long-runincrease in wages is found to be slightly below 2% per year, even when the cap on dirty production faces a steeper decline.

Identiferoai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-505107
Date January 2023
CreatorsBoksebeld, Jeroen
PublisherUppsala universitet, Nationalekonomiska institutionen
Source SetsDiVA Archive at Upsalla University
LanguageEnglish
Detected LanguageEnglish
TypeStudent thesis, info:eu-repo/semantics/bachelorThesis, text
Formatapplication/pdf
Rightsinfo:eu-repo/semantics/openAccess

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