The Effects of Renewable Energy Projects on Employment: Evidence from Brazil

This paper studies the employment impacts of renewable energy projects in Brazil. Between 2006 and 2017, Brazil’s solar capacity increased from 0.001 GW to 1.01 GW, and wind capacity increased from 0.233 GW to 12.4 GW. Using detailed employment information from the universe of formal workers in Brazil, we analyze whether the development of renewable energy projects impacts employment in the local municipalities. Solar energy projects appear to have no significant impact on local economic activity. In contrast, we find that when new wind energy projects come online, total employment in a municipality increases by 15.95 percent, and the number of firms in a municipality increases by 14.84 percent. The number of jobs in the electricity sector increases by as much as 74.33 percent, 51.72 percent in the construction sector, and 22.54 in transportation. The employment increases appear to stem from growth of existing firms and growth of new firms. The effects persist and are even larger when we consider only municipalities that have not experienced expansions in their electricity grid. Proxying land lease income with municipal tax revenues, we do not find evidence that the effects are driven by windfall income from land leases.