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Do production subsidies have a wage incidence in wind power?

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  • Dakshina G. De Silva
  • Robert P. McComb
  • Anita R. Schiller

Abstract

Employment in electricity generation from renewable resources has expanded rapidly in the US and in Texas during the last decade. Availability of the Production Tax Credit (PTC) has been an important driver of this growth. Using establishment-level employment and payroll data for Texas at the North American Industrial Classification System (NAICS)-6 level, we analyse the differences in average wages between firms generating electricity from fossil fuels and those generating electricity from wind power. We compare relative average wages before and after the rapid expansion of wind power development that followed the ex ante renewal of the PTC in 2006. Our main finding using both the parametric and nonparametric estimation techniques proposed by Racine and Li (2004), is that average payrolls for wind power generators increased relative to fossil fuel-based electricity generators after 2006.

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  • Dakshina G. De Silva & Robert P. McComb & Anita R. Schiller, 2013. "Do production subsidies have a wage incidence in wind power?," Applied Economics, Taylor & Francis Journals, vol. 45(28), pages 3963-3972, October.
    • Handle: RePEc:taf:applec:v:45:y:2013:i:28:p:3963-3972
    DOI: 10.1080/00036846.2012.741679
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    References listed on IDEAS

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    1. Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, vol. 119(1), pages 99-130, March.
    2. Arulampalam, Wiji & Devereux, Michael P. & Maffini, Giorgia, 2012. "The direct incidence of corporate income tax on wages," European Economic Review, Elsevier, vol. 56(6), pages 1038-1054.
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    8. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
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    Cited by:

    1. Roach, Travis, 2015. "The effect of the production tax credit on wind energy production in deregulated electricity markets," Economics Letters, Elsevier, vol. 127(C), pages 86-88.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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