Who Gains and Who Loses from Wind Power? Employment, Displacement, and Spatial Spillovers in Northeastern Brazil

Wind power deployment is often framed as a source of regional job creation, but its local economic incidence may be sectorally uneven and spatially dispersed. This paper estimates the effects of wind farm expansion on formal labor markets in North eastern Brazil from 2004 to 2019. Using an annual panel of 1,478 municipalities and a spatial difference-in-differences design, we estimate direct effects on host municipalities and spillover effects on nearby municipalities across industry, commerce and services, and agriculture. The results indicate a pattern of sectoral reallocation rather than broad-based employment growth. Host municipalities experience large short-run gains in industrial employment and establishment counts, while agricultural employment declines, with the strongest evidence in the short run and persistent negative point estimates at longer horizons. Neighboring municipalities also exhibit negative labor market spillovers, especially in industrial wages and wage bills and in short-run agricultural employment and wage bills. Exploratory analyses suggest more negative point estimates in inland municipalities and among low-skilled agricultural workers, although these results are based on smaller effective samples. The findings show that wind farms operate not only as energy-capacity investments, but also as spatially targeted infrastructure shocks with uneven distributive effects across sectors, workers, and municipalities. They also underscore the importance of accounting for spatial spillovers when designing quasi-experimental evaluations of renewable energy infrastructure.