Powering America: The impact of ethanol production in the Corn Belt states

This paper investigates the impact of ethanol production in the Corn Belt states (Iowa, Indiana, Illinois, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin). Employing data at the county level, from 2005 to 2006, we investigate the effect of ethanol production on employment and wages. Our empirical results show that ethanol production has a positive significant effect on employment and wages, but this effect is of insignificant magnitude. We also find that counties with high and medium levels of ethanol production capacity show higher levels of employment and wages than those counties that do not produce ethanol. Counties with low levels of ethanol production do not show any significant difference in employment and wages than non-producing ethanol counties.