Climate Action: Implications for Factor Market Allocation

This chapter examines how climate action and decarbonization policies reshape the allocation of labor, capital, and other productive factors across sectors and regions. Lawrence analyzes the economic adjustments associated with the green transition, including changes in employment patterns, industrial structure, investment flows, and comparative advantage. The chapter highlights the distributional consequences of climate policy and discusses the need for complementary policies that facilitate labor market adjustment, support affected communities, and maintain economic efficiency during the transition to a low-carbon economy.