Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

Non-Hydro Renewable Energy and Employment: A Bootstrap Panel Causality Analysis for Countries with Different Income Levels
Selahattin BEKMEZ, Fatma AGPAK

The contribution of renewable energy to overall energy consumption has been growing significantly all around the world due to its undisputable role in improving energy security and in reducing emissions. However, the existing literature has not reached a general consensus about renewable energy’s employment and welfare effects. Especially net employment impact of renewable energy is a pressing issue as many countries facing high unemployment rates. This study contributes to the field by investigating the existence and the direction of causality between non-hydro renewable energy consumption and employment for 80 countries categorized into three panels as high, middle, and low income countries. For this purpose a bootstrap panel causality test, which takes into account slope heterogeneity and cross section dependence, has been employed. The empirical results support the existence of a unidirectional causal relationship from employment to non-hydro renewable energy consumption for low and middle income countries. For high income countries, on the other hand, test results reveal the absence of Granger-causality between the variables. These findings do not favor the view that the use of renewable energy has the big potential to stimulate employment, unless a well-designed multi-objective policy mix is enacted.

Full Text: PDF