ABOUT
This project investigates whether individuals starting a career in resource-extractive industries (e.g., coal, natural gas, petroleum) experience different economic outcomes compared to those who start in other sectors. It centres on the concept of “labor lock-in,” where early career choices, especially in volatile industries, can shape long-term career trajectories. The study aims to understand how the availability of these jobs influences early career decisions, income dynamics, and employment patterns throughout one’s life. The findings will shed light on the enduring effects of career decisions in boom-and-bust industries, offering insights that are increasingly relevant as economies transition toward clean energy.
EXPECTED OUTCOMES
Extractive industries are characterized by boom-bust cycles that are more pronounced than in other sectors. Individuals who are drawn into a booming extractive industry by high wages may forgo other human capital investments, e.g., post-secondary education. Later, when fossil fuel prices fall, these workers may experience difficulty transitioning to other sectors. On the other hand, it is also possible that initial fossil fuel employment may provide sufficient capital to overcome the opportunity cost of forgoing other opportunities. The goals of this project are to understand how the availability of resource-extractive employment influences early career decisions, the dynamics of income and employment throughout the lifecycle, and mechanisms for these effects.
HOW IT RELATES TO THE STONE CENTRE’S MISSION
Current climate policy aims to reduce reliance on fossil fuels, which is necessary to meet global greenhouse gas emissions targets. However, there is widespread concern about possible adverse effects of this clean energy transition on workers in resource-dependent communities. If initial fossil fuel employment exerts long-term negative effects on individuals’ income trajectories through lock-in, then off-setting policies such as transfers and re-training programs may help workers transition to other sectors when extraction declines. Such policies would not be needed in the absence of lock-in or the presence of positive long-term employment effects, and opposition to policies promoting a clean energy transition on the basis of their disproportionate negative effect on fossil fuel workers in the long-run would be unfounded.