A new article in the Central European Economic Journal explores the economic costs workers may face during the shift to a low-carbon economy. Conducted by researchers from Climate CAKE within the AdJUST project, the study introduces a novel method to quantify wage losses for employees moving out of carbon-intensive sectors such as coal mining.
The research develops a microeconomic model of sectoral labour supply and integrates it into a Computable General Equilibrium (CGE) framework. This allows for a detailed estimation of how workers’ productivity and earnings change when they are forced to leave their current sector. Applying the model to Poland, the authors find that by 2040 climate policy could reduce workers’ earnings by about $1 billion – equivalent to 0.5% of total labour compensation.
The study also highlights policy solutions. It shows that workers’ losses could be offset with instruments such as the EU’s Just Transition Fund or national carbon tax revenues, helping to secure livelihoods and strengthen public support for ambitious climate action.
