Will the locals benefit? The effect of wind power investments on rural wages

Abstract

An important and poorly understood question when communities consider wind power investments is whether the local population will benefit financially. I examine the effect of wind power investment on wages in rural counties in the US. I combine quarterly panel data on wages with data on all wind power plant investments larger than 1 megawatt (MW). Using a Bayesian multilevel model estimated by MCMC, I estimate a significant positive effect, with a magnitude consistent with a 2% permanent increase in wages following an investment in a large wind farm of 400 MW. However, this effect has large geographic and socioeconomic variation. Counties with low employment tend to see little impact on wages from wind power, potentially because slack in the labor market prevents wages from rising. From a policy perspective, these results are most relevant for local regulators and planners, who seek to balance the benefits and costs of wind farms to the community. This research indicates that wind farms can provide, on average, a modest boost to local wages, with some areas seeing an out-sized effect.