DP17206 Do Renewables Create Local Jobs?

Author(s): Natalia Fabra, Eduardo Gutierrez, Aitor Lacuesta, Roberto Ramos Magdaleno
Publication Date: April 2022
Keyword(s): employment, job multipliers, NIMBY, Renewable Energy, spatial effects, unemployment
JEL(s): C33, L94, O25, R23
Programme Areas: Labour Economics, Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17206

We examine the temporal and spatial propagation of the impacts of renewable energy investments on local employment and unemployment. We exploit the variation in the timing and size of the investment projects across more than 2,000 Spanish municipalities from 2006-2020. We find strong heterogeneity in the magnitude and the pattern of the impacts for solar and wind investments. On average, solar investments increase employment by local firms (mainly during the construction phase), but the effects on unemployment of local residents are weak. This suggests that firms tend to hire non-residents to carry out the plants' construction. The effects of wind investments on local employment and unemployment are mostly non-significant. Our results suggest that the hosting municipalities should be compensated in order to more evenly distribute the benefits from renewable investments.