Skill and spatial mismatches for sustainable development in Brazil

Abstract:

Deforestation is a major source of global greenhouse gas emissions, and continued forest loss risks pushing the Amazon from a carbon sink to a carbon source. While recent work shows that productivity-led structural transformation towards less land-intensive sectors can reduce deforestation, the labour market implications of such pathways remain poorly understood. Here we address this gap by developing a spatially and occupationally explicit agent-based labour market model informed by empirically observed job-transition networks to simulate the ability of workers to respond to labour demand shocks. Our analysis reveals significant skill and geographic mobility frictions that constrain workers’ ability to adapt to structural change. Applying the model to productivity-driven development scenarios, we find that pathways delivering the largest deforestation and emission reductions disproportionately benefit high-skill workers while increasing unemployment among agricultural and other low-skill workers. Mobility-enhancing labour market policies can mitigate these effects, highlighting the importance of understanding labour market dynamics for equitable and feasible deforestation-reducing development pathways.