The hidden winners of renewable energy promotion: Insights into sector-specific wage differentials

In light of Germany's energy system transformation, this paper examines differences in employment structures and wage differentials between renewable energy establishments and their sector peers. To do so, we have developed a novel data set by linking company-level information from the German Renewable Energy Federation with administrative establishment-level data from the Institute for Employment Research. Descriptive evidence shows significant differences in wages and several other characteristics between renewable energy establishments and their sector peers. Our estimates give evidence that human capital and other establishment-level characteristics mostly explain the wage differential among manufacturers and energy providers. However, we find a persistent 'renewable energy wage premium' of more than ten percent in construction/installation activities and architectural/engineering services. We interpret this premium as a positive indirect effect of the promotion of renewable energies for the benefit of employees in renewable energy establishments within these two sectors.