Local and spillover effects of renewable energy investments on labor markets in Australia

This paper analyzes how utility-scale renewable energy projects affect regional and local employment and unemployment outcomes in Australia. We combine geocoded data on wind and solar project installations with labor market estimates and examine effects using the local projections difference-in-differences (LPDID) estimator. While we find no statistically significant effects on the unemployment or employment rates at the regional Statistical Area Level 4, significant effects are obtained at the finer-grained Statistical Area Level 2. Specifically, renewable project commissioning is associated with a reduction in the local unemployment rate of 0.36 percentage points on average. The decline in the local unemployment rate begins shortly before commissioning and persists for several years. Effects extend to neighboring areas. The findings also indicate that wind projects generate little local unemployment response but benefit neighboring areas, whereas solar projects reduce the local unemployment rate in both the host and neighboring areas. We find no robust effects on median income.

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