Skill-biased employment and the stringency of environmental regulations in European Countries

This study contributes to the growing literature that explores the influence of environmental policy on skill-biased employment across occupational groups. Specifically, we examine the causal effect of the revised Environmental Policy Stringency Index (EPS) and its components on skill-biased employment, focusing on occupations such as managers, professionals, technicians, and manual workers across 21 European economies from 2008 to 2020. Using the Method of Moments Quantile Regression (MMQR), we find that stringent environmental policies affect employment shares across different occupational categories. Skilled workers tend to benefit more from such policies, with a notable increase in the employment share of professionals across all policy measures and more heterogeneous effects among technicians and managers. In contrast, manual workers are generally adversely affected by environmental policies. These asymmetric effects on occupations exacerbate labour market inequalities, including disparities in employment levels and potential earnings.