The Labor Market Impact of the Energy Crisis: Evidence from Germany

This paper studies the impact of the 2022 energy price shock on German manufacturing using newly available administrative data. We construct a Bartik-type exposure measure based on pre-shock energy use and relate it to sector-, establishment-, and region-level outcomes. While highly exposed sectors experienced sizable declines in production, we find no evidence of adverse effects on employment. Instead, we consistently document negative effects on wages. Our baseline estimates suggest that moving from the 25th to the 75th percentile of the exposure distribution at the four-digit sector level is associated with an average annual wage loss of about 2.5% over 2022–2023, corresponding to roughly €1,250 per worker. These average effects mask substantial heterogeneity, with considerably larger wage declines for new hires. At the local labor market level, we find evidence of spillovers from manufacturing to other sectors.