A green wage premium?

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.