The effect of clean energy regulations and incentives on green jobs: panel analysis of the United States, 1998–2007

‘Green jobs’ are often presented as a simultaneous solution for the economic downturn and the environmental crisis, particularly as they relate to sustainable development in energy and climate change. Federal, state, and municipal authorities have employed a variety of policy tools to boost job creation within their jurisdictions. This study focuses on the role that state policies play in creating green jobs. It examines two generic policy tools – regulations and incentives – each of which can be aimed at advancing energy efficiency or renewable energy production, and assesses the relative impact they have had on generating green jobs. In order to measure this impact, we utilize panel data compiled by the Pew Charitable Trusts, which contain a state‐level count of green jobs from 1998 to 2007. The results of the analysis suggest that regulations, particularly those that mandate action on renewable energy, are likely to increase the number of private sector green jobs in states. Regulations with clear guidelines and targets tend to reduce uncertainty in business, and can lead to increased private sector investment and job availability. This study provides practical lessons regarding the type and design of policy instruments and regulations on renewable energy, which effectively encourage green job growth.