Green jobs, scarce talent: How the green transition intensifies labor shortages

Abstract

This paper examines the extent and characteristics of labor shortages in the context of the green transition of the German labor market and discusses potential strategies to mitigate them. Using online job vacancy data, a firm survey, administrative employment and apprenticeship data, and measures of occupational greenness and labor shortages from the German Federal Employment Agency, we provide a comprehensive picture of green labor demand, supply, and shortages. We show that green labor demand has increased along both the extensive and intensive margins and identify the occupations and skills most relevant to the green transition. While green occupations are represented among both shortage and non-shortage occupations, firms increasingly expect the green transition to exacerbate skill and labor shortages. At the same time, the German apprenticeship system appears to play an important role in alleviating these shortages: although green occupations face shortages of apprentices, they remain comparatively attractive to applicants. Finally, firms predominantly rely on internal adjustment mechanisms - particularly training and increased technology use - rather than external recruitment strategies, such as hiring from abroad, to address changing labor demand.