How Should We Think about Environmental Policy and Jobs? An Analogy with Trade Policy and an Illustration from U.S. Coal Mining

Abstract

Public discussions of environmentally motivated policies include much confusing talk about job loss. Does job loss in a polluting industry mean that others should endure dirty air or that complementary policies are needed? To clarify the jobs issue, I use concepts from research on international trade policy and its effects and apply them to recent job loss in the U.S. coal industry. The case of coal illustrates the economic adjustment that could arise from an environmental policy as well as the equity, efficiency, and political issues that adjustment raises. I show that for each coal job lost, earnings in the surrounding county fell by nearly $100,000, and that one-third of those who lost jobs did not move and remained unemployed. On average, the losses affected poorer counties and exacerbated income disparities between counties. Concurrently, coal county voters shifted toward pro-coal candidate Donald Trump in the 2016 U.S. presidential election, helping him win Pennsylvania. More broadly, I argue that environmental adjustment assistance of some form may improve the equity and political feasibility of environmental policies that benefit many but harm some. However, the how and when of such assistance requires further study.