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The Effects of a 2016 Electricity Tax Reform on French Manufacturing Evidence from Micro-Panel Data

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  • Melanie Marten

    (CY Cergy Paris Université, THEMA)

Abstract

This paper investigates the impact of a 2016 electricity tax reform on French manufacturing using micro-panel data spanning eight years. The reform introduced a tax reduction on electricity use contingent on gross electricity tax liability exceeding 0.5% of firm value-added. Firms that satisfy the threshold criteria are considered electro-intensive. This paper exploits both a differences-in-differences (DiD) and a regression discontinuity (RD) specification to estimate the effect of the preferential tax treatment granted to eligible firms. On average, electro-intensive firms experienced a relative drop in in their average electricity costs ranging between 12.5% and 19.5% in the post-reform period depending on the empirical approach. Nevertheless, results do not indicate that the reform had a significant or robust impact on either energy use input choices or on economic performance. Results cast doubt on the usefulness and necessity of the public policy vis-à-vis government revenues foregone.

Suggested Citation

  • Melanie Marten, 2024. "The Effects of a 2016 Electricity Tax Reform on French Manufacturing Evidence from Micro-Panel Data," Thema Working Papers 2024-02, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    • Handle: RePEc:ema:worpap:2024-02
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    References listed on IDEAS

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    1. Damien Dussaux, 2020. "The joint effects of energy prices and carbon taxes on environmental and economic performance: Evidence from the French manufacturing sector," OECD Environment Working Papers 154, OECD Publishing.
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    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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