In this paper we have reviewed the available evidence on green jobs, finding that no conclusive evidence is possible regarding the net effect of green subsidies on total employment. According to the existing literature, though, the net occupational effect of green subsidies may be positive insofar as a country is a technology-producer and –exporter. Italy is neither, which leaves room for a presumption of a negative net impact on employment. Moreover, some studies – most notably Calzada et al. (2009) – find that the net occupational effect may be negative in Spain, which is a technology-producer and –exporter.
In order to assess the situation in Italy, we have first of all estimated the amount of subsidies that have been spent or committed on renewables. To do so we have assumed the country will meet its 2020 “maximum potential” for wind and PV power, as calculated by the Italian Government (2007). This is likely to be an overestimate, leading to overestimating the number jobs that will be created. Then, we have reviewed the existing estimates on the actual number of green jobs. Even though we feel that virtually all these studies overestimate the number of green jobs, we have taken them as a given, in order to use them as a basis for our projection of job creation by 2020. With these data, we have been able to estimate the total stock of capital embodied in the wind and PV capacity that will be on field in 2020, and hence to estimate the average stock of capital per worker.
Finally, we have compared the average stock of capital per worker in the RES with the average stock of capital per worker in the industry and the entire economy, finding an average ratio of 6.9 and 4.8, respectively. To put it another way, the same amount of capital that creates one job in the green sector, would create 6.9 or 4.8 if invested in industry or the economy in general, respectively – although differences exist between RESs themselves, with wind power more likely to create jobs than PV power. This fact is particularly relevant because we didn’t even consider the non-trivial value of the renewable energy produced, but we focused on pure subsidies. If we had considered the energy value, the average stock of capital per worker would be even higher. Since subsidies are forcibly taken away from the economic cycle and allocated for political purposes, it is especially important to have a clear vision of what consequences they bring.
This does not necessarily mean that the creation of one green job would destroy 7 jobs in the industry. This just suggests what is obvious by anecdotal and financial evidence, i.e. that the green industry is a capital-intensive, not a labor-intensive, industry. It is no surprise, therefore, that green investments generate fewer jobs than investments in other sectors of the economy, and most notably the industrial sector. This does not even necessarily mean that the green economy is a net loss of resources, although there is some evidence even for this.
The only scope, and we dare to say the only result, of our study is to show that green investments are an ineffective policy for job creation. Regardless to their other merits, that we have not reviewed in this paper, to the extent that the “green deal” is aimed at creating employment or purported as anti-crisis or stimulus policy, it is a wrong policy choice.
Istituto Bruno Leoni, May 2010
IBL is grateful to GAS INTENSIVE Soc. Consortile a r.l. – Milano – for its support of this study.
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