Abstract: Renewable portfolio standards have been widely adopted by the many states due in large part to their broad political appeal. Of particular note is the significance that labor market impacts have played in the rhetoric for adopting renewable portfolio standards--they are commonly touted and perceived as net job creating policies. No robust analysis has yet been performed to assess the effectiveness of renewable portfolio standards in achieving this policy goal, however. Through regression analysis that directly accounts for previously unconsidered selection biases, this work seeks to approach the question of labor market impacts and determine to what extent renewable portfolio standards have affected employment within the electricity industry as well as the broader economy at both the state and regional levels. The presence of selection bias, identified via a Maddala Two-Stage Treatment Effects Model, was found to significantly impact coefficient estimates. Once these biases were econometrically factored out, RPS policies were found to be unambiguously effective at increasing the share of the electricity portfolio provided by renewable energy. The resultant expansion in renewable energy capacity was in turn found to have several statistically significant labor market impacts at both the state and regional levels. At the state level, RPS policies are associated with ceteris paribus increases in employment in RE related fields (including installation and production), a decrease in employment in the broader electrical generation sector, and provided no statistically significant impact on overall employment within a state. At the regional level the benefits of RPS policies appear far greater. Under a regional specification an estimated ceteris paribus increase in employment in RE related fields, no statistically significant impact on overall employment in the electrical generation sector, and an increase in total region-wide employment was observed. Estimates of gains of approximately 2% in total regional employment are supported. The discrepancy between state and regional impacts was attributed to both labor and renewable energy capacity leakages across state borders, driven by economies of agglomeration; causing neighboring states to benefit from a local adoption of the RPS policy.
Keywords: Alternative energy standard,Employment,Policy design,Renewable energy,Renewable energy standard, Renewable portfolio standard