The Role of Human Development for a Successful Green Transition | (News and Research 339)

As the world continues to grapple with climate change impacts, policies aiming to reduce greenhouse gas emissions and decouple the economy from natural resource consumption must also address the green transition’s unintended consequences, particularly for the poor and vulnerable.

In its regional report, Making the European Green Deal Work for People: The Role of Human Development in the Green Transition, the World Bank identifies education, health, and social protection policies crucial for a successful green transition in Europe.

The report highlights that the green transition may have uneven impacts across individuals and regions in Europe. While prosperous, innovative regions with highly skilled workforces stand to benefit, less developed areas could face challenges. To address this, workers in shrinking carbon-intensive industries require access to training and reskilling programs, aligned with the needs of emerging green industries and coordinated with public employment services to provide labor market opportunities. Government programs and labor market agencies must shift their approach to support workers in finding jobs during the green transition.

Students and workers need robust foundational skills to capitalize on the opportunities created by the green transition. EU Member States must modernize their technical, vocational education, and training systems, and education systems must act now to produce long-term improvements in foundational skills (numeracy, literacy, and socio-emotional skills) and foster the development of technologies to reduce emissions and alter consumer preferences.

The report outlines four criteria for a successful green transition: effectiveness, efficiency, sustainability, and attainability. Each criterion addresses specific aspects of the transition.

Making the European Green Deal Work for People: Role of Human Development in Green Transition | This report offers an analysis of the challenges for the European Union posed by the green transition. It highlights the essential role that the human development will play in making the green transition attainable and sustainable, and its potential to drive changes in the society towards more environmentally conscious actions. Overview here, landing page and video.

Sanchez-Reaza, J., Ambasz, D., Djukic, Predrag. 2023. Making the European Green Deal Work for People: The Role of Human Development in the Green Transition. Washington, DC: World Bank Group. 

A Review of Human Development and Environmental Outcomes | As climate change and its impact on the physical environment become increasingly evident, its relationship with human development outcomes is becoming a key area of research. While numerous researchers have studied the ways in which the immediate environment affects human capital, literature on the impact of human capital on the environment remains scarce. Despite the heightened interest in understanding the linkages between human development outcomes and environmental factors, most studies of this relationship are theoretical, correlational, or observational, thus lacking causality. This paper surveys the literature and explores how evidence can be established for policies focusing on human development and environmental outcomes. The paper presents a conceptual framework incorporating direct and indirect pathways – including cognitive and noncognitive factors through which improved education can lead to better environmental behaviors. Of the 31 studies reviewed, a majority (27 studies) present observational findings, while only a few (four studies, or 13 percent) use a quasi-experimental design to establish causality. The few causal studies suggest that it is possible to change attitudes but more difficult to change environmental behaviors. The review raises the key question of whether policies aimed at improving climate change awareness through education can effectively produce long-lasting changes in pro-environmental behaviors. Much more work is needed to advance understanding of how human capital policy can help mitigate or promote adaptation to climate change.

Ambasz, D., Gupta, A.K., Patrinos, H.A. 2023. A Review of Human Development and Environmental Outcomes. World Bank Policy Research Working Paper No. 10438.

Human Capital and Climate Change | Addressing climate change requires individual behavior change and voter support for pro-climate policies, yet surprisingly little is known about how to achieve these outcomes. This paper estimates causal effects of additional education on pro-climate outcomes using new compulsory schooling law data across 16 European countries. It analyzes effects on pro-climate beliefs, behaviors, policy preferences, and novel data on voting for green parties—a particularly consequential outcome to combat climate change. Results show a year of education increases pro-climate beliefs, behaviors, most policy preferences, and green voting, with voting gains equivalent to a substantial 35% increase.

Angrist, N., Winseck, K., Patrinos, H.A., Zivin, J.G. 2023. Human Capital and Climate Change. World Bank Policy Research Working Paper No. 10316.

Education Quality, Green Technology, and the Economic Impact of Carbon Pricing | Carbon pricing is increasingly used by governments to reduce emissions. The effect of carbon pricing on economic outcomes as well as mitigating factors has been studied extensively since the early 1990s. One mitigating factor that has received less attention is education quality. If technological change that reduces the reliance of production on emissions is skill-biased, then carbon pricing may increase the skill premium of earnings and subsequent wage inequality; however, a more elastic skill supply through better education quality may mitigate adverse economic outcomes, including wage inequality, and enhance the effect of carbon pricing on technological change and subsequently emissions. A general equilibrium, overlapping-generations model is proposed, with endogenous skill investment in which the average skill level of the workforce can affect the need for emissions in an aggregate production function. This study uses data on industrial emissions linked to the Organisation for Economic Co-operation and Development’s Programme for International Assessment of Adult Competencies dataset for European Union countries. The findings show that, within countries, cognitive skills are positively associated with employment in industries that rely less on emissions for production and in industries that, over time, have been able to reduce their reliance on emissions for production. In the estimated general equilibrium model, higher cognitive skills reduce an economy’s reliance on emissions for production. Having higher quality education—defined as the level of cognitive skills attained by workers per unit of cost—increases the elasticity of skill supply and, as a result, mitigates a carbon tax’s economic costs including output loss and wage inequity, and enhances its effect on emissions reduction. The implication is that investments in education quality are needed for better enabling green technological innovation and adaptation and reducing inequality that results from carbon pricing.

Macdonald, K., Patrinos, H. 2021. Education Quality, Green Technology, and the Economic Impact of Carbon Pricing. World Bank Policy Research Working Paper No. 9808

Other studies:

Steering the Human Development Strategy for a Sustainable Green Economy in the Slovak Republic

Greening Public Human Development Buildings in Croatia – Support for the Implementation of the European Green Deal in the Croatian Health and Education Sectors

R&D Policy and the Role of Research Institutions in Fostering Green Innovation in Poland


New data map bridges higher education and labor market | Harvard University has launched a data map highlighting mismatches and matches across the United States between higher education graduates and job opportunities, to help encourage career-relevant higher education investment. See here.


ECA Talk Returns to Education Turns 50 on March 29, 2023, Event Replay. Watch the discussion from earlier this week reassessing progress made on measuring the benefits of education 50 years after the publication of George Psacharopoulos’ pivotal study Returns to Education. Timestamps for remarks and panel discussions during the event replay are marked under the Agenda tab.

Submit a Manuscript to the Journal Education Economics for a Special Issue on the 50th Anniversary of the Returns to Education: An International Comparison | Manuscript deadline: 31 October 2023 | Special Issue Editor: Harry Patrinos, World Bank | Submit An Article | This year is the 50th anniversary of the publication of the book, Returns to Education: An International Comparison, by George Psacharopoulos (assisted by Keith Hinchliffe). Education Economics is publishing a special issue to mark this occasion and the contributions of Professor Psacharopoulos. The focus of this special issue is research on the returns to education. Research on international comparisons and /or  returns to education in less developed economies are especially welcome.