The Social and Environmental Consequences of the Twin Energy-Digital

Abstract

We analyze the employment and environmental effects of US firms’ exposure to green and digital technologies between 2010 and 2023. Using establishment-level data on online job postings, we develop a novel measure of technological adoption by linking firms’ skill requirements to advances in green and digital patents. To address endogeneity, we implement a shift-share instrumental variables design based on technological progress occurring outside the U.S. Our analysis yields four main findings. First, green technology adoption leads to job creation, with an estimated employment elasticity to green exposure of 0.4 to 0.5, though this effect has weakened since 2015. Second, the employment impact of green innovation varies across sectors: innovations in IT and buildings tend to complements labor, while advances in transportation and smart grids are more labor-substituting. Third, both green and digital innovations raise the relative demand for high-skill workers. Fourth, we find no evidence that digital technology adoption adversely affects firms’ greenhouse gas emissions.

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