Conference Agenda

The transition to a low-carbon economy requires a contraction of fossil fuel sectors, raising questions about the labor market costs of reallocation. We study the 2014 oil price shock as a quasi-experiment to examine the contraction of Norway’s oil and gas extraction industry. Using matched employer–employee data, we estimate long-run effects on earnings and employment using two complementary approaches. A difference-in-differences design shows moderate losses for all oil workers, while an event study reveals substantially larger and more persistent losses among displaced workers: up to 10% in earnings and 5% in employment nine years after displacement, especially for those with lower educational attainment. Although few displaced workers transition into green jobs, they are equally likely to enter green and brown (non-oil) sectors when accounting for the size of each destination sector. Earnings losses are larger for those entering green jobs rather than brown (non-oil) jobs, but smaller than for those entering other sectors. Decomposition results indicate that differences in establishment wage premiums, rather than skill mismatch, explain most of the observed gaps. Finally, geographic heterogeneity analysis shows that local labor market structure shapes recovery: proximity to green sectors and larger labor markets mitigate displacement costs, while residing in an oil-dependent region does not predict worse outcomes conditional on displacement.

Rural electrification is vital to development, yet evidence from grid expansion remains mixed. Exploiting the staggered rollout of China’s Rural Primary Electrification Program and a DID-IV strategy, this paper examines the development impacts of small hydropower, a decentralized renewable technology providing both electricity and irrigation. SHP promotes agricultural output primarily through irrigation-driven extensive-margin increases in sown area, labor, and capital use, with limited effects on yields, and these effects are concentrated in rice-growing regions. SHP also improves electricity reliability and facilitates the adoption of energy-intensive appliances, especially among higher-income households. These findings highlight SHP’s dual role in driving rural development.

In 2023, the US introduced a place-based subsidy for utility-scale clean electricity. It increases the value of nationwide subsidies (the Investment and Production Tax Credits) in areas called "Energy Communities," referring to the historical presence of fossil fuel industry in those areas. I use the policy to identify a simple microeconomic model that generates bounds on the subsidy elasticity of new renewable electricity capacity in the US. Applying the empirical model results, I examine whether the place-based subsidy improves or worsens the emissions abated per subsidy dollar compared to a spatially constant subsidy. Underlying these exercises are reduced-form estimates of whether the subsidy causes new proposed and operational electricity capacity in Energy Communities, as well as measurements of the congestion externalities caused by more proposed projects. Preliminary results show that the subsidy increases energy storage project proposals, but not solar and wind proposals. On the other hand, the subsidy causes more solar and wind operational capacity, but not yet more operational energy storage capacity. The policy is a modest win-win for environment, cost-effectiveness, and equity.

Cross-border infrastructure projects often promise large welfare gains yet fail because they require consent from multiple jurisdictions with misaligned fiscal incentives. We develop a welfare framework for evaluating such projects when political participation constraints bind. We introduce the Political Marginal Value of Public Funds (PMVPF), a criterion that measures policy value net of the compensation required to secure universal consent. In a theoretical network model with decentralized budgets, projects with the largest aggregate efficiency gains can impose the largest concentrated losses, leading to sharp ranking reversals once political feasibility is taken seriously.

We apply this framework to European electricity interconnectors using a sufficient-statistics approach with high-frequency data on prices, flows, and transmission outages. We show that while standard efficiency metrics imply welfare gains that are dozens of times larger than the fiscal cost of investment, political compensation absorbs roughly 80–90 percent of aggregate gains, clustering the PMVPF near one. Preliminary simulations indicate that political implementation costs can exceed engineering costs by an order of magnitude, providing a quantitative explanation for persistent underinvestment in cross-border transmission infrastructure.