Abstract
Long–distance power transmission is a crucial solution for alleviating the uneven distribution of energy and promoting economic development. This work is the first to provide an estimate of the benefits to employment of long–distance power transmission. Using unique data from the China National Tax Survey Database for the years 2007–2016, we utilized ultra–high voltage (UHV) project of China as an exogenous shock to investigate how long–distance power transmission affects firms' labor demand by employing the difference–in–differences method. We found that the UHV system significantly increased firms' labor demand. A mechanism analysis suggested that the UHV system did this mainly by facilitating firm entry and expanding firm production scale. A heterogeneity analysis indicated that, compared with provinces with low grid reliability and grid capacity, firms in provinces with high grid reliability and grid capacity exhibited a stronger response to the UHV system in terms of labor demand. Our research findings provide a new solution for countries to balance resource distribution, energy transition, and employment growth.
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