Does EV increase labor productivity? Evidence from the states of the USA

Abstract

This study analyzes the causal relationship between electric vehicle (EV) adoption and labor productivity across the U.S. states from 2016-2023. The presented analyses establish a robust positive influence of EV adoption on labor productivity using pooled OLS, fixed effects models, Lewbel GMM, Oster Test and Blinder-Oaxaca decomposition. The outcome of the regional analysis indicates that there is a high level of heterogeneity, i.e. Southern states have productivity deficits that are caused by unobserved institutional factors, and Western states have better resource endowments. On the other hand, the channel analysis on the racial disparities reveals that the states with higher populations of minorities face considerable barriers to EV adoption, especially post- 2020. However, these states seem to have comparable productivity due to better resource utilization. Moreover, environmental quality is used as a mediating variable with carbon emission having a negative relationship with productivity. These results provide valuable insights for policymakers who want to foster the adoption of Electric Vehicles and reduce regional and demographic barriers to EV adoption.