On Environmental Policy and Jobs: An Analogy with Trade and an Illustration with Coal

Abstract

Popular discussions of environmentally-motivated policies include much talk about job loss that can be confusing. Does job loss in a polluting industry mean that others should endure dirty air or that complementary policies are needed? I make sense of the issue by drawing concepts from research on international trade and its effects and applying them to recent job loss in the coal industry. The coal case study illustrates the economic adjustment that could plausibly stem from an environmental policy as well as the equity, efficiency, and political issues that adjustment raises. Each coal job lost reduced earnings in the county by nearly $100,000, and one third of those who lost jobs did not move and remained unemployed. The losses affected counties that were poorer on average, and the losses exacerbated the disparity. They also contributed to a shift towards pro-coal Trump in the 2016 presidential election, a shift that helped him win Pennsylvania. More broadly, a type of environmental adjustment assistance may improve the equity and political feasibility of environmental policies that benefit many but harm some. The how and when of assistance is unclear, but one case for study is the Assistance to Coal Communities initiative.