Do production subsidies have a wage incidence in wind power?
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 has been an important driver of this growth. Using a fully-disclosed establishment-level employment and payroll data set for Texas at the NAICS-6 level, we analyze 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 Production Tax Credit (PTC) in 2006. Using QCEW data, our main finding using both least squares and the nonparametric estimation technique proposed by Racine and Li (2004), is that average payrolls for wind power generators increased relative to fossil fuel-based electricity generators after 2006. As far as we know, this is the first paper that attempts to estimate the indirect impact of the PTC on wind energy industry wages.
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