The green transition is one of the biggest challenges that economies worldwide face today. This process will likely change economic structures. Wallach (2022) predicts that one of the consequences of the transition to cleaner forms of production, such as the deployment of greener forms of energy, will be the creation of more than 10 million new jobs worldwide by 2030, exceeding the number of jobs expected to be lost in most polluting sectors (fossil fuel-intensive). While certain occupations or skills are disappearing or no longer needed, others are undergoing substantial changes in human capital requirements, and new occupations and skills are emerging. Therefore, what skills are required to be part of a greener economy, the costs of switching to greener jobs, or the wage premium for being in a green job, are some of the key questions in the economics of labor markets today. IMF (2022) highlights that this transition will be more straightforward for highly skilled workers (i.e., those with post-secondary or tertiary education). Hence, labor markets face risks and opportunities due to this transition, which is shaping a new scenario in the characteristics of the labor force.

Although this transition is a global trend, countries are implementing different policies that may have heterogeneous implications for changes in the level and composition of labor markets (OECD, 2017). OECD regions, for example, are experiencing an increase in the demand for green-task jobs; i.e., occupations with at least 10% of their tasks considered green. In Latin America and the Caribbean (LAC), the demand for green skills, especially environmental services, indicates a clear growth of these trends, but at a slower pace than in OECD countries (Alfonso et al., 2022). In LAC, this green transition is expected to add 10.5% more new jobs by 2030 (OECD, CAF, and European Comission, 2022). In addition to the increase in the demand for green tasks, green jobs appear to be more financially attractive than non-green jobs. Across OECD countries, the wage premium for green jobs versus non-green jobs is 20% (OECD, 2023).

In this context, a growing body of literature has been analyzing the current situation of countries regarding green jobs, how they manage this transition, and its effects. The focus has been mainly on the measurement of the green potential of jobs, particularly in developed countries (Bowen et al., 2018, Lobsiger and Rutzer, 2021) and on the differences between green and non-green jobs in terms of skills and human capital (Consoli et al., 2016, Rutzer and Niggli, 2020, Vona et al., 2018, Curtis et al., 2023), the quality and characteristics of green jobs (Valero et al., 2021), and the wage differentials between green and non-green industries (Jackman and Moore, 2021). However, few studies have analyzed whether jobs with a higher share of green tasks have a wage premium (Bluedorn et al., 2022, Vona et al., 2019), i.e., whether they are economically attractive. In addition, fewer studies have focused on the impact of that level of education (García-Suaza et al., 2023) or skills (Vona et al., 2019, Chen et al., 2021, Krueger et al., 2020) have on these wage differences between green and non-green workers. Regarding Latin America, several studies documented a positive wage greenium — a wage premium for green jobs relative to non-green jobs — primarily attributed to differences in human capital, productivity, and job characteristics (Consoli et al., 2016, Jackman and Moore, 2021, Alvarez, 2024, Winkler-Seales et al., 2024).¹ Alvarez (2024) shows that in Latin America, green jobs are concentrated in formal, technologically intensive, better-paying sectors, and that the relative scarcity of skills, sectoral concentration, and increased bargaining power of workers partially explain the observed wage premium.

The purpose of this paper is to shed light on the current situation of green jobs in nine major Latin American countries that accounted for 81% of the region’s GDP in 2021: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay; (LA9 hereafter). During 2012–2019 (the period under analysis), Latin America’s macroeconomic performance was marked by a pronounced post-commodity-boom slowdown, with growth stalling in the mid-2010s and several economies entering recession (De Gregorio, 2015). Limited productivity growth has been identified as a key factor behind this deceleration. Despite heterogeneity across countries, the region faces major structural challenges such as widespread poverty (including extreme poverty) and persistently low productivity growth. Labor markets are also highly segmented, with generally poor job quality and high levels of informality: more than half of workers are employed in informal, low-paying jobs without social security, and youth and women are particularly vulnerable (Messina and Silva, 2019, David et al., 2020, Aristizabal-Ramirez et al., 2024, OECD, 2024).

In this context, Latin America has recently embarked on more sustainable development pathways by implementing country-specific policies to facilitate the transition to greener forms of production. In particular, since the Paris Agreement in 2015 and through different regional summits (Cumbre de las Americas 2021; Cumbre UE CELAC, 2023), the LAC region has become increasingly committed to achieving climate neutrality and resilience. Within this framework, sector-specific and sequenced mitigation strategies have been adopted, primarily via non-price tools such as public investment, fiscal incentives, government expenditures, and several and regulatory measures like technological and emissions norms (OECD, 2024, IMF, 2022).

It is therefore important to assess the situation of workers in green jobs and the labor implications of the green transition in LAC, considering the region’s specific labor market features and the limitations and barriers it faces. Our paper addresses the potential wage differences between workers in green and non-green jobs; that is if there exists a wage greenium. Additionally, we assess the implications of education in explaining wage gaps between workers in green and non-green jobs. Therefore, we are interested in whether more- or less-educated workers in green jobs earn more than those in non-green jobs. We contribute to the recent literature highlighting a positive wage gap for those working in green jobs in developed countries and explore possible heterogeneities that may arise within countries in the same region and within educational levels.

To this end, we define green jobs as those occupations with high greenness scores using the occupational approach as in Vona et al., 2018, Vona, 2021, and de la Vega et al. (2024). Our main findings suggest a positive wage greenium that is also increasing in the years of education. That is, workers in green jobs with higher years of education earn more than those in non-green jobs with the same level of education. For LA9, the wage greenium is nearly 15.8%, although there are heterogeneities between countries. While the results presented in this paper should be interpreted primarily as descriptive rather than causal, they represent a meaningful step forward in our understanding of the wage implications of green employment within Latin America.

The rest of this paper is organized as follows. Section 2 reviews the literature. Section 3 presents the sources of information used. Section 4 deals with the empirical strategy. Finally, Section 5 presents the results, and Section 6 concludes.