Closures of coal-fired power stations in Australia: local unemployment effects

Abstract

Around one-third of Australia’s coal-fired power stations closed between 2012 and 2017, with most of the remainder expected to close over coming decades. Current investment in generation capacity is primarily in the form of alternative power, especially wind and solar. In this paper, we conduct an event study to assess the local unemployment effects of Australia’s coal-fired power station closures, an issue of considerable interest given the prominence of coal-fired power stations in local economies. Our analysis uses monthly regional labour force survey data from the Australian Bureau of Statistics. We find that on average there has been an increase in local unemployment of around 0.7 percentage points after closures of coal-fired power stations, an effect that tends to persist beyond the months immediately after closures. The findings raise questions about appropriate policy responses for dealing with local structural adjustment issues facing coal-reliant communities.