Compensating for the Climate: Unemployment Insurance and Climate Change Votes

Global climate change is a pressing political issue, yet some governments have done more to address it than others. Building on the “compensation hypothesis” from the international trade literature, I argue that legislators are more willing to support carbon restrictions when workers in their districts are protected by generous unemployment insurance. I test this hypothesis with an analysis of Congressional climate change votes. I find that higher carbon-intensive employment makes legislators less likely to vote for carbon restrictions, but this effect is weaker where unemployment benefits are high. I also find that generous unemployment benefits make legislators more likely to vote for carbon restrictions but only where carbon-intensive employment is high. My results imply that generous unemployment insurance can help governments to pass stronger climate change legislation. More broadly, they indicate that struggles over the welfare state have important consequences for other policy domains.