Do production subsidies have a wage incidence in wind power?

De Silva, Dakshina and Schiller, Anita and McComb, Robert P. (2013) Do production subsidies have a wage incidence in wind power? Applied Economics, 45 (28). pp. 3963-3972. ISSN 0003-6846

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.