Conference Agenda

The transition to a low-carbon economy requires a contraction of fossil fuel sectors, raising questions about the labor market costs of reallocation. We study the 2014 oil price shock as a quasi-experiment to examine the contraction of Norway’s oil and gas extraction industry. Using matched employer–employee data, we estimate long-run effects on earnings and employment using two complementary approaches. A difference-in-differences design shows moderate losses for all oil workers, while an event study reveals substantially larger and more persistent losses among displaced workers: up to 10% in earnings and 5% in employment nine years after displacement, especially for those with lower educational attainment. Although few displaced workers transition into green jobs, they are equally likely to enter green and brown (non-oil) sectors when accounting for the size of each destination sector. Earnings losses are larger for those entering green jobs rather than brown (non-oil) jobs, but smaller than for those entering other sectors. Decomposition results indicate that differences in establishment wage premiums, rather than skill mismatch, explain most of the observed gaps. Finally, geographic heterogeneity analysis shows that local labor market structure shapes recovery: proximity to green sectors and larger labor markets mitigate displacement costs, while residing in an oil-dependent region does not predict worse outcomes conditional on displacement.