The effects of long-distance power transmission on employment growth: Empirical evidence from ultra-high voltage projects of China

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.