Sustainable Development Transition and Employment Constraints: An Empirical Analysis of Energy and Environment in <scp>BRICS</scp> and <scp>G7</scp>

ABSTRACT The dynamic improvements within manufacturing structures have had a profound impact on how renewable energy is key to sustainable development goals. Yet the complexity within modern economic complexity means that further debate is key to evaluating whether or not adopting energy transition processes creates new jobs and, thus, for the employment level of all economies, especially where these processes are advanced. In this regard, the aim of this study is to investigate how the transition to clean energy and environmental technologies can affect the unemployment rate in industrial and emerging economies. To avoid possible omitted variable bias, the current study considers economic growth, public sector size, energy transition environmental regulations, financial development, and technological innovations to investigate unemployment scenarios within sustainable development parameters. The empirical findings from extended econometric analysis reveal that while the energy transition process has an employment‐increasing effect in developing countries, it has the opposite effect in developed countries. In contrast, environmental regulations increase unemployment in developing countries. Our detailed investigative approach allows us to identify how key policy parameters can augment the sustainable development transition.