IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v125y2023ics0140988323003389.html
   My bibliography  Save this article

Asymmetric responses to severance tax changes: Coal production in West Virginia

Author

Listed:
  • Hoy, Kyle A.

Abstract

I use aggregate and mine-level data to analyze changes in coal production due to West Virginia imposing a 56 cent per short ton severance tax in 2005, as well as the effect of the tax's subsequent repeal in 2016. To do so, I construct a dataset of quarterly coal production for West Virginia and neighboring control states not exposed to changes in severance tax policy. Difference-in-differences results suggest that the severance tax increase had no significant effect on either aggregate or mine-level production. Conversely, I find that the severance tax decrease led to an 11.8% increase in aggregate coal production and a 24.4% increase in mine-level production.

Suggested Citation

  • Hoy, Kyle A., 2023. "Asymmetric responses to severance tax changes: Coal production in West Virginia," Energy Economics, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003389
    DOI: 10.1016/j.eneco.2023.106840
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988323003389
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2023.106840?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    2. Betz, Michael R. & Partridge, Mark D. & Farren, Michael & Lobao, Linda, 2015. "Coal mining, economic development, and the natural resources curse," Energy Economics, Elsevier, vol. 50(C), pages 105-116.
    3. Marchand, Joseph, 2012. "Local labor market impacts of energy boom-bust-boom in Western Canada," Journal of Urban Economics, Elsevier, vol. 71(1), pages 165-174.
    4. Reimer, Matthew N. & Guettabi, Mouhcine & Tanaka, Audrey-Loraine, 2017. "Short-run impacts of a severance tax change: Evidence from Alaska," Energy Policy, Elsevier, vol. 107(C), pages 448-458.
    5. Apergis, Nicholas & Payne, James E., 2010. "Coal consumption and economic growth: Evidence from a panel of OECD countries," Energy Policy, Elsevier, vol. 38(3), pages 1353-1359, March.
    6. Mitch Kunce & Shelby Gerking & William Morgan & Ryan Maddux, 2003. "State Taxation, Exploration, and Production in the U.S. Oil Industry," Journal of Regional Science, Wiley Blackwell, vol. 43(4), pages 749-770, November.
    7. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    8. Dan Black & Terra McKinnish & Seth Sanders, 2005. "The Economic Impact Of The Coal Boom And Bust," Economic Journal, Royal Economic Society, vol. 115(503), pages 449-476, April.
    9. Brown, Jason P. & Maniloff, Peter & Manning, Dale T., 2020. "Spatially variable taxation and resource extraction: The impact of state oil taxes on drilling in the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    10. Deacon Robert T., 1993. "Taxation, Depletion, and Welfare: A Simulation Study of the U.S. Petroleum Resource," Journal of Environmental Economics and Management, Elsevier, vol. 24(2), pages 159-187, March.
    11. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    12. Katie Jo Black & Shawn J. McCoy & Jeremy G. Weber, 2018. "When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 107-153.
    13. Hoy, Kyle A. & Wrenn, Douglas H., 2018. "Unconventional energy, taxation, and interstate welfare: An analysis of Pennsylvania's severance tax policy," Energy Economics, Elsevier, vol. 73(C), pages 53-65.
    14. Kunce, Mitch, 2003. "Effectiveness of Severance Tax Incentives in the U.S. Oil Industry," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(5), pages 565-587, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rickman, Dan & Wang, Hongbo, 2020. "What goes up must come down? The recent economic cycles of the four most oil and gas dominated states in the US," Energy Economics, Elsevier, vol. 86(C).
    2. Reimer, Matthew N. & Guettabi, Mouhcine & Tanaka, Audrey-Loraine, 2017. "Short-run impacts of a severance tax change: Evidence from Alaska," Energy Policy, Elsevier, vol. 107(C), pages 448-458.
    3. Becker, Sascha O. & Heblich, Stephan & Sturm, Daniel M., 2021. "The impact of public employment: Evidence from Bonn," Journal of Urban Economics, Elsevier, vol. 122(C).
    4. Timothy W. Kelsey & Mark D. Partridge & Nancy E. White, 2016. "Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(2), pages 191-214.
    5. Sun, Xiaohua & Ren, Junlin & Wang, Yun, 2022. "The impact of resource taxation on resource curse: Evidence from Chinese resource tax policy," Resources Policy, Elsevier, vol. 78(C).
    6. Brown, Jason P. & Maniloff, Peter & Manning, Dale T., 2020. "Spatially variable taxation and resource extraction: The impact of state oil taxes on drilling in the US," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    7. Pellegrini, Lorenzo & Tasciotti, Luca & Spartaco, Andrea, 2021. "A regional resource curse? A synthetic-control approach to oil extraction in Basilicata, Italy," Ecological Economics, Elsevier, vol. 185(C).
    8. Echevarría, Cruz A. & Hasancebi, Serhat & García-Enríquez, Javier, 2022. "Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 179-215.
    9. Nicolaj N. Mühlbach, 2020. "Tree-based Synthetic Control Methods: Consequences of moving the US Embassy," CREATES Research Papers 2020-04, Department of Economics and Business Economics, Aarhus University.
    10. Daniel Albalate & Germà Bel & Ferran A. Mazaira-Font, 2020. "Ensuring Stability, Accuracy and Meaningfulness in Synthetic Control Methods: The Regularized SHAP-Distance Method," IREA Working Papers 202005, University of Barcelona, Research Institute of Applied Economics, revised Apr 2020.
    11. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    12. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    13. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    14. Chiara Cavaglia & Sandra McNally & Henry G. Overman, 2020. "Devolving Skills: The Case of the Apprenticeship Grant for Employers," Fiscal Studies, John Wiley & Sons, vol. 41(4), pages 829-849, December.
    15. Nimonka Bayale & Pouwemdéou Tchila & Jacques‐Patrick Arnold Yao & Honoré Tenakoua, 2022. "Do tax administration reforms improve tax revenue performance in Togo? Empirical insights from experimental approaches," South African Journal of Economics, Economic Society of South Africa, vol. 90(2), pages 196-213, June.
    16. Chuku Chuku & Mustafa Yasin Yenice, 2021. "Working Paper 356 - Eurobonds, debt sustainability and macroeconomic performance in Africa: Synthetic controlled experiments," Working Paper Series 2482, African Development Bank.
    17. Bibek Adhikari & Romain Duval & Bingjie Hu & Prakash Loungani, 2018. "Can Reform Waves Turn the Tide? Some Case Studies using the Synthetic Control Method," Open Economies Review, Springer, vol. 29(4), pages 879-910, September.
    18. Sadeghi, Ali & Kibler, Ewald, 2022. "Do bankruptcy laws matter for entrepreneurship? A Synthetic Control Method analysis of a bankruptcy reform in Finland," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    19. Katie Jo Black & Shawn J. McCoy & Jeremy G. Weber, 2018. "When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 107-153.
    20. Raffaello Bronzini & Sauro Mocetti & Matteo Mongardini, 2020. "The economic effects of big events: Evidence from the great jubilee 2000 in Rome," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 801-822, September.

    More about this item

    Keywords

    Coal; Severance tax; Difference-in-differences;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.