Oral, IsilSantos, IndhiraZhang, Fan2013-01-292013-01-292012-12https://hdl.handle.net/10986/12204This paper analyzes the differential impact of climate change policies on employment in Eastern Europe and Central Asia. In particular, the paper examines (i) how vulnerable labor markets are in Eastern European and Central Asian countries to future carbon regulation, and (ii) what countries can do to mitigate some of the potential negative effects of these regulatory changes on employment. In many aspects, the nature of the shock associated with climate regulation is similar to that associated with an increase in energy prices. Constraints on carbon emissions put a price on climate-damaging activities and make hydrocarbon-based energy production and consumption more expensive. As a result, firms in energy-intensive industries may react to higher energy prices by reducing production, which in turn would lead to lower employment. In the presence of frictions in labor markets, these sector shifts will cause resources to be unemployed, at least in the short term. Using principal component analysis, the paper finds that Eastern European and Central Asian countries vary greatly in their vulnerability and adaptability of employment to carbon regulation. Since the economy takes time to adjust, policy-makers will need to ensure that the incentives are there for new firms to emerge and employ workers, and that workers have the skills to respond to that demand. Moreover, governments have a role to play in ensuring that workers that are displaced have a proper safety net that will not only help in protecting their welfare, but will also allow workers to make more efficient labor market transitions.en-USCC BY 3.0 IGOACCOUNTINGACTIVE LABORACTIVE LABOR MARKETACTIVE LABOR MARKET POLICIESACTIVE LABOR MARKET POLICYACTIVE LABOR MARKET PROGRAMSACTIVE LABOR PROGRAMSAGGREGATE DEMANDAGGREGATE EMPLOYMENTAPPROACHAVAILABILITYAVERAGE UNEMPLOYMENTAVERAGE WAGEAVERAGE WAGESBALANCEBARGAININGBARGAINING POWERBIOMASSCAPITAL INVESTMENTCAPITAL MARKETCARBON EMISSIONSCARBON TAXESCARPENTERSCEMENTCLASSROOM TRAININGCLEAN ENERGYCLEANER TECHNOLOGYCLIMATE CHANGECLIMATE CHANGE POLICYCOALCOLLECTIVE DISMISSALSCOLLEGE EDUCATIONCOMMERCIALIZATIONCOST INCREASESDEMAND FOR ELECTRICITYDIFFERENTIATED IMPACTDIRECT JOB CREATIONDIRECT JOB CREATION PROGRAMSDISADVANTAGED GROUPSDISMISSALDISPLACED WORKERSDOMESTIC COALECONOMIC POLICIESECONOMIC SHOCKECONOMIC SHOCKSEDUCATIONAL ATTAINMENTEFFICIENCY OF LABOREFFICIENT LABOR MARKETEFFICIENT LIGHTINGELECTRICITYELECTRICITY PRICEELECTRICITY PRICESELECTRICITY SUPPLYEMISSIONEMISSION CAPEMPLOYABILITYEMPLOYMENTEMPLOYMENT EFFECTEMPLOYMENT EFFECTSEMPLOYMENT GROWTHEMPLOYMENT IMPACTEMPLOYMENT IMPACTSEMPLOYMENT INCENTIVESEMPLOYMENT INCREASEEMPLOYMENT INCREASESEMPLOYMENT OFFICESEMPLOYMENT OPPORTUNITIESEMPLOYMENT PROGRAMSEMPLOYMENT PROTECTION LEGISLATIONEMPLOYMENT SERVICESENERGY BILLSENERGY CONSUMPTIONENERGY DEVELOPMENTENERGY EFFICIENCYENERGY PRICEENERGY PRICESENERGY PRODUCTIONENERGY USEEXPENDITUREFIRM SURVEYSFIRST-TIME JOB SEEKERSFLEXIBLE LABOR MARKETSFOSSILFOSSIL FUELFOSSIL FUELSFUELFUEL PRICESFUELSGENERAL EQUILIBRIUMGENERATIONGREENHOUSE GASGREENHOUSE GAS EMISSIONSGREENHOUSE GASESGROSS WAGEHIGH UNEMPLOYMENTHIGH UNEMPLOYMENT RATESHIGHER ENERGY PRICESHOUSEHOLD SURVEYHUMAN CAPITALHYDROPOWERINCOMEINCOME SECURITYINCOME SUPPORTINFORMAL SECTORINNOVATIONJOB CREATIONJOB SEARCHJOB SEARCH ASSISTANCEJOB TRAININGJOB-SEARCH ASSISTANCEJOBSLABOR COSTSLABOR DEMANDLABOR FORCELABOR MARKET CONDITIONSLABOR MARKET FLEXIBILITYLABOR MARKET INSTITUTIONSLABOR MARKET NEEDSLABOR MARKET PROGRAMSLABOR MARKET REFORMSLABOR MARKET REGULATIONLABOR MARKET REGULATIONSLABOR MARKETSLABOR REALLOCATIONLABOR REGULATIONSLABOR SUPPLYLOCAL FIRMLONG-TERM UNEMPLOYMENTLOW EMPLOYMENTLOW UNEMPLOYMENTMARKET ECONOMYMARKET REFORMMINIMUM WAGENATURAL GASOILOIL PRICEOIL PRICESOIL PRODUCEROIL PRODUCERSOIL SHOCKSON-THE-JOB TRAININGPASSIVE LABORPERSISTENT UNEMPLOYMENTPOWER GENERATIONPOWER PLANTPOWER PLANTSPREVIOUS SECTIONPRICE CHANGEPRICE CHANGESPRICE INCREASEPRICE INCREASESPRICE OF ELECTRICITYPRICE SUBSIDIESPRIMARY ENERGYPRIMARY SCHOOLPRIVATE SECTORPRIVATE SERVICEPRODUCTION PROCESSESPRODUCTIVE INDUSTRIESPRODUCTIVITY INCREASEPUBLIC EMPLOYMENTPUBLIC EMPLOYMENT SERVICESPUBLIC WORKSREGULAR EMPLOYMENTREGULAR JOBSRENEWABLE ENERGYRENEWABLE SOURCESRETAILRETAIL TRADERIGID LABOR MARKETSAFETYSAFETY NETSALESSERVICE PROVIDERSSEVERANCE PAYSEVERANCE PAYMENTSSKILLS DEVELOPMENTSOCIAL BENEFITSSOCIAL PRICESOLAR PANELSOLAR POWERSUBSTITUTIONSUBSTITUTION EFFECTSTAX INCENTIVETAX REVENUESTEMPORARY EMPLOYMENTTEMPORARY WORKTEMPORARY WORKERSTOTAL EMPLOYMENTTOTAL UNEMPLOYMENTTRAINING COURSESTRAINING INSTITUTIONSTRAINING POLICIESTRAINING PROGRAMSUNEMPLOYEDUNEMPLOYED WORKERSUNEMPLOYMENTUNEMPLOYMENT ASSISTANCEUNEMPLOYMENT BENEFITUNEMPLOYMENT BENEFIT SYSTEMUNEMPLOYMENT BENEFITSUNEMPLOYMENT INSURANCEUNEMPLOYMENT RATEUNEMPLOYMENT RATESUNION DENSITYUNSKILLED WORKERSUTILITIESVOCATIONAL EDUCATIONVOCATIONAL PROGRAMSWAGE LEVELWAGE LEVELSWAGE SECTORWAGE SUBSIDIESWINDWIND POWERWORKERWORKERSWORKING HOURSWORKING POORWorld Bank10.1596/1813-9450-6294