Labor Market Adjustments: Evidence From British Columbia's Carbon Tax
Labor Market Adjustments
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AbstractChapter 1 uses individual-level data to estimate the labor market consequences of environmental policies. The focus on workers rather than industries as the unit of analysis allows me to investigate previously unobserved outcomes, such as (i) unemployment rates, labor force participation rates, and the natures of layoffs and new hires and (ii) the distributional effects of these policies, both of which are critical to understanding costs and their distributions associated with environmental policies. Exploiting the introduction of a revenue-neutral carbon tax in British Columbia (BC), I find that environmental taxes, though revenue-neutral, tax away jobs. Chapter 2 exploits BC's carbon tax to study how jobs and wages are cut. It uncovers the dynamics of unemployment and wage effects. While the unemployment effect arrives without lags but decays quickly, the wage effect comes with lags but grows gradually. Chapter 2 provides strong evidence to conclude that a complete understanding of unemployment and wage effects requires an explanation of employment flows---the inflow and outflow of employment. Chapter 2 bridges between the literature and the public---it explains why prior studies may find the labor market effects of environmental policies weak and explains why the public is so concerned with potential job and wage losses created by environmental policies. Chapter 2 provides new micro-evidence on labor market adjustments and calls for attention to the transitional labor market adjustments to environmental policies. Chapter 3 exploits an aggregate shock of BC's carbon tax to study how replacing full-time (FT) staffers with part-timers shapes a labor market. Chapter 3 uncovers important yet underexplored mechanisms of labor market adjustments through PT switches. With employers increasingly hiring part-timers, PT switches reduce labor hours through labor turnover. Due to a significant wage differential between FT and PT new hires, the average hiring wage is cut: PT switches explain approximately 20 percent of the hiring wage cut. Chapter 3 offers new perspectives on labor market adjustments, quantifies the extent to which the adjustments through PT switches, and calls for policies mitigating labor market underutilization.
CitationYip, C. M. (2020). Labor Market Adjustments: Evidence From British Columbia's Carbon Tax (Unpublished doctoral thesis). University of Calgary, Calgary, AB.
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