2024/21 | LEM Working Paper Series | ||||||||||||||||
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Creating Jobs Out of the Green: The Employment Effects of the Energy Transition |
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Elisabetta Cappa, Francesco Lamperti and Gianluca Pallante |
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Keywords | |||||||||||||||||
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renewable energy, employment multiplier, green stimulus, shift-share
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JEL Classifications | |||||||||||||||||
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C26, H50, P18, Q20, Q43, Q52
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Abstract | |||||||||||||||||
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The success of the green transition depends on the rapid and sustained
adoption of renewable energy (RE) technologies. This paper uses a
novel and detailed geo-localized dataset of RE power units deployment,
across four technologies and spanning three decades, to empirically
analyze the employment impacts of RE investments across European
regional economies. To address the non-random deployment of renewable
energy technologies, we exploit the regional physical potential for RE
sources and construct an instrument for the regional exposure to
technology-specific investments that is arguably exogenous to
confounding economic factors. We find that the deployment of renewable
energy plants has a positive and long-lasting impact on employment,
generating about 40 jobs in seven years for each additional megawatt
of generation capacity, primarily in the construction and agricultural
sectors. We find evidence of geographical spillovers and substantial
heterogeneity, with rural and low-income areas experiencing larger
gains from RE deployment. The effects extend to regional output, with
an RE investment multiplier exceeding unity over a 5-year
horizon. Overall, these type of investments can represent an effective
policy to spur local jobs and encourage rural development.
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