Direct employment refers to employment that is generated directly by core activities without taking into account the intermediate inputs necessary to manufacture renewable energy equipment or construct and operate facilities. These directly involved industries are also called renewable energy industries (sectors). Direct employment data may be estimated on basis of an industry survey, or data derived from representative projects and facilities for the industry in question or calculated with the help of economic data such as labour input coefficients (employment factors) for selected industries.
Indirect employment includes the employment in upstream industries that supply and support the core activities of renewable energy deployment. Workers in such positions may produce steel, plastics or other materials, or they provide financial and other services. These industries are not directly involved in renewable energy activities but produce intermediate inputs along the value chain of each renewable energy technology. A literature review indicates that the inclusion of indirect jobs typically increases overall job numbers by anywhere from 50% to 100%.
Induced employment encompasses jobs beyond the renewable energy industry and its upstream industries, such as jobs in the consumer goods industry. When people who are employed directly or indirectly spend their incomes on a variety of items in the broader economy (such as food, clothing, transportation and entertainment), the expenditure gives rise to induced employment effects.