Abstract:*

We study a reform that extended corporate income tax exemptions in Indonesia to investments in renewable energy capacity. Exploiting plausibly exogenous regional variation in renewable resource endowments, we find a twofold increase in the share of renewables in total installed capacity, partially driven by slower investments in nonrenewables. We find no effects on manufacturing, a decline in mining activity accompanied by lower wages but no change in employment, and an increase in employment in services, particularly in energy utilities. These results also have implications for the role of renewables in regional development.

*Co-authored with Mayang Sari and Hans-Peter Weikard (both affiliated with WUR)

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This will be a hybrid seminar. If you are interested in joining this seminar, please send an email to the secretariat of ASF at asf-feb@uva.nl.