Successful Workforce Transitions in a fast-CHanging labor market (SWiTCH)

SWiTCH seeks to identify factors that facilitate efficient and equitable workforce transitions in an era of fast-paced change. In particular, the project aims to shed light on potential opportunities and challenges in the transition to a low-carbon society, by drawing on a broad range of lessons from the past. The research project is organized into three parts, which all rely on high-quality Norwegian register data on individuals and firms. Part 1 of the project is descriptive and investigates to what extent structural change and labor market turbulence are more predominant now than before. In particular, we ask questions such as: Do we change jobs more often than before? Are more workers in temporary employment relationships? Are we moving towards a more polarized labor market? In Part 2, we aim to identify causal effects of various smaller and larger workforce transitions in the past. Potential study cases include the mass lay-offs after the 2014 oil price drop, restructuring of the banking sector and postal services, implications of large exchange rate fluctuations, and effects of strengthened environmental regulation and increased costs of energy and emission intensive activities. Key research questions are: What distinguishes successful transformation processes from the failures? How are costs and benefits distributed across different population groups? What are the roles of skills, policies, and context in shaping worker level impacts? Identification will rely on exploiting random-assignment-like sources of variation in exposure to various shocks. In Part 3, we aim to shed light on expected labor market consequences of a future green transition. We will do so by examining the extent to which existing skills and competences map into those needed in a low-carbon economy, and by synthesizing findings from past experiences, where we pay particular attention to insights relevant to a green transition. Preliminary findings: The Norwegian report “Indikatorer for å måle omstillingstempo i norsk økonomi” presents indicators that aim to measure the speed of structural change in the Norwegian labor market over the past 25 years, with an emphasis on the development after 2015. The report also attempts to distinguish between “green” and “brown” industries, as well as between “green” and “non-green” occupations. Results from the report show that: • The speed of labor market restructuring has declined somewhat over the past 25 years • Brown and green industries make up relatively small shares of the workforce in the years after 2015 – around 3.5% and 2.4%, respectively. • In the years after 2015, the job creation rate in green industries has been relatively stable and somewhat higher than the job creation rate in brown industries, but the gap has declined over time due to a slight increase in the job creation rate for brown industries. • Relatively few workers move from brown to green industries, and vice versa. • There is a weakly positive trend in the share of green jobs based on the classification of green occupations. • Three different indicators show that the rate of labor market restructuring in green industries are somewhat higher than in brown industries. Preliminary findings from a scientific paper in progress («The Effect of Carbon Taxes on Wages and Employment: Evidence From Matched Worker-Firm Data») show that the Norwegian CO2-tax implemented in the 1990s had a relatively small effect on wages and employment among workers in the manufacturing industry. Preliminary findings from a scientific paper in progress («A green wage premium") show that the green wage premium is small in magnitude and sensitive to the definition of green. A scientific paper in progress ("From brown to green: employment dynamics and skill demand in a low-carbon transition”) examines effects of the oil price fall in 2014, and finds that petroleum workers experienced a substantial negative shock in terms of lower labor earnings, higher unemployment rates and a higher probability of leaving the labor force. Relatively few petroleum workers left for green industries after the shock, but the (self-selected) group that did experienced a smaller decline in labor earnings than workers that left for other industries. However, the petroleum workers that left for other “brown” industries were best off in terms of labor earnings. Results from a master thesis at the University of Oslo, supervised by the project leader, shows that the oil price shock in 2014 affected low-and high-skilled petroleum workers differently: Low-skilled workers experienced a sharper fall in wages and were more likely to receive unemployment benefits in the years following the oil price fall. Further, the thesis finds that high-skilled petroleum workers had a somewhat larger probability of changing to a green industry after the oil price shock compared to low-skilled petroleum workers. Website: www.frisch.uio.no/english/projects/?view=project&pid=3195

This project is motivated by the challenges to labor market efficiency and inequality from rapid technological change and a low-carbon transition. The aim of the project is to examine costs and benefits related to past (and future) structural transformations of the labor market. We propose three sub-projects, which all rely on high-quality Norwegian register data on individuals and firms. Part A of the project is descriptive, and investigates to what extent structural change and labor market turbulence are more predominant now than before. In particular, we will ask questions such as: Do we change jobs more often than before? Are more workers in temporary employment relationships? Are we moving towards a more polarized labor market? In Part B, we aim to identify causal effects of various smaller and larger workforce transitions in the past. Potential study cases include (among others) the restructuring of the banking sector, mass lay-offs after the 2014 oil price drop, and implications of large exchange rate fluctuations. Key research questions are: What distinguishes successful transformation processes from the failures? How are costs and benefits distributed across different population groups? What are the roles of skills, policies, and context in shaping worker level impacts? Identification will rely on exploiting random-assignment-like sources of variation in exposure to various shocks. Part C will focus on a future "green shift" and consists of three tasks. In C.1, we will develop a methodology for defining "green skills", which we will use to examine the overlap in the skill-set of existing workers and the set of skills needed in a low-carbon economy. In C.2, we will synthesize findings in B and C.1, with the aim of distilling lessons from the past to shed light on challenges and opportunities under a low-carbon transition. In C.3, we will compare experiences across countries, by means of a collaborative database project with international partners.