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The impact of Energy Prices on Employment and Environmental Performance : Evidence from French Manufacturing Establishments

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  • Giovanni Marin

    (University of Urbino "Carlo Bo"; SEEDS, Ferrara, Italy.)

  • Francesco Vona

    (OFCE, Sciences Po Paris, France)

Abstract

This paper evaluates the historical influence of energy prices on a series of measures of environmental and economic performance for a panel of French manufacturing establishments over the period 1997-2010. The focus on energy prices is motivated by the fact that changes in environmental and energy policies have been dominated by substantial reductions in discounts for large consumers, making the evaluation of each policy in isolation exceedingly difficult. To identify price effects, we construct a shift-share instrument that captures only the exogenous variation in establishmentspecific energy prices. Our results highlight a trade-off between environmental and economic goals: although a 10 percent increase in energy prices brings about a 6 percent reduction in energy consumption and to a 11 percent reduction in CO2 emissions, such an increase also has a modestly negative impact on employment (-2.6 percent) and very small impact on wages and productivity. The negative employment effects are mostly concentrated in energyintensive and trade-exposed sectors. Simulating the effect of a carbon tax, we show that job losses for the most exposed sectors can be quite large. However, these effects are upper bounds and we show that they are significantly mitigated in multi-plant firms by labor reallocation across establishments.

Suggested Citation

  • Giovanni Marin & Francesco Vona, 2017. "The impact of Energy Prices on Employment and Environmental Performance : Evidence from French Manufacturing Establishments," Documents de Travail de l'OFCE 2017-26, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:1726
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    References listed on IDEAS

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    Cited by:

    1. Giovanni Marin & Francesco Vona, 2018. "Climate policies and Skill-biased employment dynamics : evidence from EU countries," Sciences Po publications 23, Sciences Po.
    2. Francesco Lamperti & Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Alessandro Sapio, 2018. "And Then He Wasn't a She: Climate Change and Green Transitions in an Agent-Based Integrated Assessment Model," LEM Papers Series 2018/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    Energy prices; establishment performance; environmental and energy policy;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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