We analyze the quantitative labor market and aggregate eects of a carbon tax in  a framework with pollution externalities and equilibrium unemployment. Our model  incorporates endogenous labor force participation and two margins of  adjustment in-uenced by carbon taxes: (1) rm creation and (2) green production-technology adop- tion. A carbon-tax policy that reduces carbon emissions by 35 percent|roughly the  emissions reductions that will be required under the Biden Administration's new com- mitment under the Paris Agreement|and transfers the tax revenue to households gen- erates mild positive long-run eects on consumption and output; a marginal increase in the unemployment and labor force participation rates; and an expansion in the number and fraction of rms that use green technologies. In the short term, the adjustment to higher carbon taxes is accompanied by gradual gains in output and consumption and a negligible expansion in unemployment. Critically, abstracting from endogenous rm entry and green-technology adoption implies that the same policy has substantial adverse short- and long-term eects on labor income, consumption, and output. Our ndings highlight the importance of these margins for a comprehensive assessment of the labor market and aggregate eects of carbon taxes.