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GTAP Resource #6841

"Structural change and socio-economic disparities in a net zero transition"
by Lynch, Cormac, Yeliz Simsek, Jean-François Mercure, Panagiotis Fragkos, Julien Lefevre, Thomas Le Gallic, Kostas Fragkiadakis, Leonidas Paroussos, Dimitris Fragkiadakis, Florian Leblanc and Femke Nijsse

A sustainability transition is likely to generate substantial and irreversible economic transformation. Old high-carbon industries and related occupations will disappear, while new low-carbon industries and occupations will be created. Whilst in the aggregate, the impact of the transition on global GDP and employment is commonly projected to be relatively moderate, such estimates hide drastic distributional issues that are sectorally and regionally concentrated, with profound implications for households, employees, companies, and nations. Here, we use three sectorally detailed and regionally disaggregated global macroeconomic models to explore the likely levels and impacts of structural change in the global and national economies in a net zero transition. We observe a drastic transformation that affects production and employment in sunset carbon-intensive industries and their dependent value chains, alongside value and job creation in the sunrise industries of a relatively similar magnitude. The impacts of post-industrial decline resulting from decarbonisation are regionally and sectorally concentrated and transmitted across the global economy through channels of demand and international trade. The risks entailed with structural change involve worsening economic disparity and societal division that could exacerbate existing socio-economic and political polarisation. We call for the further development of tools with suitable sectoral and regional disaggregation to investigate structural change and distributional impacts, especially in industries severely affected (positively or negatively) by the low-carbon transition.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Created: Lefevre, J. (4/11/2023)
Updated: Lefevre, J. (4/11/2023)
Visits: 368
- Climate change policy

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