Green jobs pay up to 20.5% more, according to a study across nine countries in the region. The difference is explained by higher levels of education and more adverse working conditions, rather than by the employment sector itself. The green transition benefits the formal sector, but still excludes women and the informal economy.

According to a report by Luiz Felipe Fernandes published on SciDev.Net, Latin American workers in “green jobs” earn, on average, 15.8% more than those in traditional occupations. These findings are based on a study published in the latest issue of Structural Change and Economic Dynamics.

The research analyzed labor markets in Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay.

The results show that the “wage greenium”—the salary premium associated with green jobs—is present in most countries, although with varying intensity.

Mexico recorded the largest gap, with wages 20.5% higher than in non-green occupations. Brazil (16.3%) and Uruguay (14.8%) are close to the regional average. Chile (9.5%), Ecuador (8.8%), and Argentina (8.2%) show smaller differences, while Bolivia, Colombia, and Peru do not present statistically significant wage variations.

According to the study, the share of green jobs is highest in construction (67%), other industries (39%), and primary activities (26%), and lowest in education, healthcare, and personal services (9%). However, this does not necessarily imply higher or lower green wages in those sectors.

The study defines “green jobs” not by sector, but by tasks linked to environmental sustainability, such as energy efficiency, natural resource management, or emissions reduction.

Economist Pablo de La Vega, co-author of the study, explained to SciDev.Net that this definition allows for the identification of green jobs even within “brown” sectors—that is, major greenhouse gas emitters.

“An engineer installing solar panels holds a green job, as does someone responsible for reducing environmental pollution in an industrial plant,” explained de La Vega, a researcher at the Institute of Economic Research at the National University of La Plata, Argentina.

While the study does not directly attribute the wage gap to the sustainability nature of the job, de La Vega noted that academic literature suggests that human capital accumulation—education level, professional training, and experience—may explain this outcome.

According to the research, an individual with nine years of schooling earns approximately 9% more in a green job, while someone with 18 years of education earns an additional 27%.

Another explanation for the wage gap lies in so-called “compensating differentials”—salary variations designed to offset non-monetary job characteristics such as risk or discomfort.

In this sense, green jobs may involve conditions that justify higher compensation.

“For example, if these jobs are concentrated in highly polluting industries, implying greater exposure to adverse working conditions—such as pollution—it is reasonable to expect a wage premium to compensate for the disutility faced by workers,” the researcher explained.

According to a report by the Economic Commission for Latin America and the Caribbean (ECLAC), the energy transition could increase the number of new jobs in the region by 10.5% by 2030.

However, the new study shows that the economic benefits of the green transition are uneven, being concentrated primarily in the formal sector. According to de La Vega, this disparity represents a critical issue for public policy.

“Unless informality and labor market segmentation are directly addressed, the green transition may intensify wage inequality and structural disparities in Latin America’s labor markets,” he warned.

This is compounded by gender inequality. Although the study did not analyze wage differences by gender, it found that just over 13% of employed women in Latin America work in green occupations, compared to 31% of men.

For de La Vega, governments in the region should incorporate the promotion of green jobs into existing labor policies.

Moreover, given the financial attractiveness of green jobs, public policies could be implemented to further “green” the labor market, particularly benefiting workers with lower levels of education.

From our perspective, as long as they contribute to increasing formal employment, any public policy aimed at promoting green jobs is valid. Private employment agencies could accelerate the creation of formal green jobs by bringing greater dynamism, security, and flexibility to labor markets across the region.

Photo of Artem Beliaikin in Unsplash