Front Matter
Author:
Oya Celasun https://isni.org/isni/0000000404811396 International Monetary Fund

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Galen Sher https://isni.org/isni/0000000404811396 International Monetary Fund

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Petia Topalova https://isni.org/isni/0000000404811396 International Monetary Fund

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Jing Zhou https://isni.org/isni/0000000404811396 International Monetary Fund

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Copyright Page

© 2023 International Monetary Fund

WP/23/116

IMF Working Paper

European Department

Cars and the Green Transition: Challenges and Opportunities for European Workers

Prepared by Oya Celasun, Galen Sher, Petia Topalova, and Jing Zhou

Authorized for distribution by Oya Celasun

June 2023

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

ABSTRACT: Reducing transport sector emissions is an important pillar of the green transition. However, the transition to electric vehicles (EV) portends major changes in vehicle manufacturing activity, on which many livelihoods in Europe depend. Using the heterogeneity across European countries in the speed of transition to EV production and variation in sectoral and regional exposure to the automotive sector, this paper offers early evidence of the labor market implications of the EV transition. Our results suggest that the transformation of the auto sector is already having an adverse impact on employment in the affected sectors and regions, which can be expected to grow at least in the near term. Many of the affected workers will be able to retire and our analysis suggests that those who will have to transition to new “greener” jobs have a fair chance to do so when compared to other workers in the manufacturing sector. Furthermore, we find evidence that active labor market policies, specifically training, can help to reduce the adjustment costs for the affected workers.

RECOMMENDED CITATION: Celasun, Oya, Galen Sher, Petia Topalova, and Jing Zhou. 2023. “Cars and Green Transition: Challenges and Opportunities for European Workers” IMF Working Paper 23/116, International Monetary Fund, Washington, DC.

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Title Page

WORKING PAPERS

Cars and the Green Transition: Challenges and Opportunities for European Workers

Prepared by Oya Celasun, Galen Sher, Petia Topalova, and Jing Zhou1

Contents

  • I. Introduction

  • II. The Transition to EVs

  • III. Evidence on Employment Effects

    • Evidence Based on Different Sectoral Exposures to the Automotive Sector Electrification

    • Evidence Based on Different Regional Exposures to the Automotive Sector Electrification

  • IV. The Role of Policies

  • V. Reallocation Prospects of the Adversely Affected Sectors

  • VI. Conclusion

  • FIGURES

  • 1. Exports of Electric Vehicles

  • 2. New Registrations and Sales of Electric Vehicles

  • 3. Electric Vehicle Charging Stations

  • 4. Countries in Europe with Official Targets for a 100 Percent Phase Out of ICE Vehicle Sales

  • 5. RRF-Funded Spending Dedicated to the Automotive Sector

  • 6. Employment of Automotive-Related

  • 7. Number of Automotive Employees (FTE) by Region, 2015

  • 8. Employment in the Automotive Sector in European Regions, 2015

  • 9. Change in Employment Rate, 2015–19

  • 10. Prospects of Switching to a Green Job: Germany

  • TABLES

  • 1. Labor Market Outcomes and Exposure to Electrification: Sectoral Evidence

  • 2. Labor Market Outcomes and Exposure to EV Production: Regional Evidence

  • 3. Scenarios of the Numbers of EU Workers affected by the EV Transition

  • 4. Unemployment Rate and Exposure to EV Production: The Role of Workers’ Education

  • 5. Unemployment Rate and Exposure to EV Production: The Role of Workers’ Age

  • 6. Labor Market Outcomes and Exposure to EV Production: The Role of Policies

  • Annex I. Data Sources and Variable Construction

  • References

1

The authors would like to thank Sabiha Mohona for excellent research assistance. Oya Celasun ocelasun@imf.org; Galen Sher gsher@imf.org; Petia Topalova ptopalova@imf.org; Jing Zhou jzhou@imf.org. The views expressed in this paper do not necessarily represent the views of the IMF, its Executive Board or IMF management.

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Cars and the Green Transition: Challenges and Opportunities for European Workers
Author:
Oya Celasun
,
Galen Sher
,
Petia Topalova
, and
Jing Zhou