Wind farm development, despite offering global benefits, often encounters local opposition fostered by local negative externalities and uncertain benefits. This study investigates the financial impact of wind farm development on host municipalities using Spanish municipality-level budget data from 1994 to 2022. Results from two-way fixed effect difference-in-difference and event study models show an average 45 percent increase in municipal revenue per capita, funding real investments and current expenditures. This revenue increase, driven by a tax base expansion, is complemented by a rise in capital income and local tax responses in the form of higher tax rates associated with this infrastructure.  

This paper provides novel evidence of the effect of fiscal decentralization on inequality. We exploit the decentralization of the Spanish Personal Income Tax that took place in 2010 in order to document how granting normative power to heterogeneous sub-national regions affected the redistributive effect of the tax. We first provide descriptive evidence for stark heterogeneity of the pre-tax income distribution across regions. We show that decentralization decreased the regional Gini on average by 0.04 points. To document efficiency effects of the tax, we apply the methodology of Zidar (2019) and combine the heterogeneous distribution with national tax shocks. Results indicate that tax hikes on the rich are reflected by wage increases, while we find little effects on employment and output. 

In the presence of strong labor market segmentation, risk is unevenly distributed across worker groups, and it can lead to different demands for redistribution. We study the impact of labor market risk associated with temporary contracts on individual preferences for income redistribution. The Spanish labor market, where one-third of workers are employed under temporary contracts, provides a good context for our study. We use data from the European Social Survey from 2002 to 2018 and apply an exact matching methodology to isolate the effect of the contract type from other individual characteristics. Our results reveal that temporary contracts lead to an 11 percent increase in the likelihood of strongly supporting redistribution, irrespective of individuals’ education level or gender. In terms of age, the effect is concentrated among individuals aged 40 and above, indicating an increase in risk perception when this contractual figure becomes a dead end. During periods of macroeconomic uncertainty, which extend risk beyond contract type, the redistribution preferences of temporary and permanent workers equalize due to a substantial increase in the preferences of those with an ex-ante more secure labor market position. Our results document that labor market risk is a strong determinant of redistribution preferences.