Green careers offer greater financial reward, according to a study conducted by two UWI Cave Hill economic researchers. The findings by Head of the Department of Economics Dr. Mahalia Jackman and Professor of Economics Winston Moore have shown that employees in sustainable industries earn approximately seven per cent more than those in non-sustainable sectors.
The study, titled "Does it pay to be green? An exploratory analysis of wage differentials between green and non-green industries," was published in the Journal of Economics and Development in April, 2020.
Their research explores the wage impacts of shifting towards environmentally sustainable production patterns, using labour force survey data and interval regression, the latter being an economic tool used to model outcomes. According to Jackman and Moore, their findings shed light on an underdeveloped area of research, highlighting wage inequalities associated with transitioning towards a greener economy.
Key Findings
This study presents significant findings for policymakers and stakeholders in the labour market:
- Wage Premium in Green Industries: Workers in green industries enjoy a wage premium of about seven per cent compared to their counterparts in non-green industries. This premium persists even after accounting for factors like occupation, human capital, and gender.
- Educational Disparities: The study found that 21.24% of individuals in green industries hold a degree or professional designation, compared to only 8.89% in non-green sectors. This suggests that green industries may require higher-level qualifications and more sophisticated skills.
- Impact of the Global Financial Crisis: Green industries were more significantly affected by the global financial crisis, leading to a decline in the green wage premium during economic downturns.
Implications for Labour Market Policy
The study's findings have profound implications for labour market policies, particularly as countries strive to meet their carbon emission targets set by the Paris Agreement on climate change. Policymakers are urged to facilitate the transition of workers from non-green to green industries through educational loans, grants, and incentives for companies to retool their employees.
Jackman and Moore emphasise the importance of ensuring workers can easily transition within green industries to mitigate the risk of uncertain job prospects during economic downturns. They propose that the observed wage premium may partly compensate for the higher job insecurity in green sectors.
Future Research Directions
While the study provides a crucial first step in understanding wage differentials between green and non-green industries, the authors acknowledge several limitations. These include the reliance on cross-sectional data and the inability to control for nontraditional human capital factors like cognitive and interpersonal skills. Jackman and Moore call for further research to confirm their findings in other countries and to conduct cross-country comparisons of green and brown wage differentials using comparable data.
Conclusion
As the global economy continues to pivot towards sustainability, understanding the labour market implications of this transition becomes increasingly critical. This Jackman and Moore study offers valuable insights into the economic benefits of green jobs and sets the stage for more comprehensive research in this emerging field.
By providing evidence of a wage premium in green industries, the study not only highlights the potential financial incentives for workers but also underscores the need for supportive policies to ensure a smooth and equitable transition towards a greener economy.