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Energy-tax changes and competitiveness: The role of adaptive capacity

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  • Gonseth, Camille
  • Cadot, Olivier
  • Mathys, Nicole A.
  • Thalmann, Philippe

Abstract

This paper estimates the effect of energy tax (and price) changes on Total Factor Productivity (TFP) and net trade at the industry level, using a panel of industries from European countries covering the period 1990–2003. We investigate the hypothesis that industries with high adaptive capacity (measured by their relative level of labour compensation) are able to mitigate the adverse effects of energy tax rises better than others. We identify the pro-adaptation effect by interacting wage levels (a proxy for human capital) with energy taxes. We find that the negative marginal effect of higher energy taxes on TFP and net trade is significantly reduced for industries with stronger human capital and even turns to an overall positive effect in at least two cases. Up to three low-wage sectors display an overall negative effect. This suggests that human capital is key to adaptation to higher energy costs and climate policy, in some cases making it a win-win.

Suggested Citation

  • Gonseth, Camille & Cadot, Olivier & Mathys, Nicole A. & Thalmann, Philippe, 2015. "Energy-tax changes and competitiveness: The role of adaptive capacity," Energy Economics, Elsevier, vol. 48(C), pages 127-135.
  • Handle: RePEc:eee:eneeco:v:48:y:2015:i:c:p:127-135
    DOI: 10.1016/j.eneco.2014.12.010
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    Cited by:

    1. Jana Stoever & John P. Weche, 2018. "Environmental Regulation and Sustainable Competitiveness: Evaluating the Role of Firm-Level Green Investments in the Context of the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 429-455, June.
    2. repec:eee:enepol:v:114:y:2018:i:c:p:262-273 is not listed on IDEAS
    3. repec:eee:ejores:v:262:y:2017:i:3:p:1181-1195 is not listed on IDEAS
    4. repec:eee:eneeco:v:71:y:2018:i:c:p:370-382 is not listed on IDEAS
    5. repec:eee:eneeco:v:67:y:2017:i:c:p:242-254 is not listed on IDEAS

    More about this item

    Keywords

    Energy taxes; Energy prices; Total factor productivity; Net trade; Porter hypothesis;

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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