Quantifying the economy-wide employment effects of coal-fired power plants: Two different cases China and the United States

Abstract

Ensuring a swift transition from coal to clean energy is essential for capping global temperature increases at 1.5 °C, but it poses significant economic and social challenges in coal-dependent regions. This paper examines the economy-wide employment impacts resulting from the activities of coal-fired power plants in China and the United States, the world's largest coal consumers. By analyzing observational data on the different stages of coal power, including both expansion and reduction in the two countries, we aim to derive insights that can inform a more effective and just transition during the phase-out of coal power. We leveraged unique periods post-2010 when China was predominantly opening coal plants while the US was closing them, identifying the economy-wide employment impacts at the county level. By using both two-way fixed effects and spatial econometric models for over 10 years of panel data, covering 2875 in China and 3233 counties in the US, we addressed spillover effects and ensured robust and comprehensive results. Our findings revealed that in China, coal plant deployment increased employment both locally and in the neighboring counties. In the U.S., our findings indicate that before 2015, closing coal plants generally had a negative impact on jobs. However, after 2015, when the U.S. introduced new federal and state-level transition policies, the impact on employment became positive. While it is hard to prove these policies directly facilitate the just transition, our findings demonstrate that they do not hinder the employment aspect of a just transition focused on coal power generation at a regional scale.