Labor Demand Effects of Rising Electricity Prices: Evidence for Germany
Germany plays a pioneering role in replacing conventional power plants with renewable energy sources. While this is beneficial with respect to environmental quality, the energy turnaround implies increasing electricity prices for private households and firms. The extent to which this is associated with negative impacts on employment depends on the interrelationship between labor and electricity as input factors. In this paper, we estimate cross-price elasticities between electricity and heterogeneous labor for the German manufacturing sector. We use administrative linked employer-employee micro data combined with information on electricity prices and usage during the period 2003-2007. Our findings suggest that there is a weak substitutability between electricity and labor, when the production level is held constant. We find positive, but small conditional cross-price elasticities of labor demand with respect to electricity prices between 0.09 and 0.31. In case of adjustable output, we find moderate gross complementarity with negative unconditional cross-elasticities ranging between -0.06 and -0.69. Labor demand is affected differently across skill levels with low- and high-skilled workers being affected more than medium-skilled. Our estimates suggest that the announced increase of the EEG surcharge in 2014 would decrease overall employment in the manufacturing sector by 86,000 workers, a decline by 1.4 percent.
|Date of creation:||Dec 2013|
|Date of revision:|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Koebel, Bertrand & Falk, Martin & Laisney, Francois, 2003. "Imposing and Testing Curvature Conditions on a Box-Cox Cost Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 319-35, April.
- Joseph E. Aldy & William A. Pizer, 2015.
"The Competitiveness Impacts of Climate Change Mitigation Policies,"
Journal of the Association of Environmental and Resource Economists,
University of Chicago Press, vol. 2(4), pages 565 - 595.
- Aldy, Joseph Edgar & Pizer, William, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Scholarly Articles 5688779, Harvard Kennedy School of Government.
- Aldy, Joseph E. & Pizer, William A., 2014. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp14-025, Harvard University, John F. Kennedy School of Government.
- Aldy, Joseph E. & Pizer, William A., 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp11-047, Harvard University, John F. Kennedy School of Government.
- Aldy, Joseph E. & Pizer, William A., 2015. "The Competitiveness Impacts of Climate Change Mitigation Policies," Working Paper Series rwp15-046, Harvard University, John F. Kennedy School of Government.
- Joseph E. Aldy & William A. Pizer, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," NBER Working Papers 17705, National Bureau of Economic Research, Inc.
- Olivier Bargain & Herwig Immervoll & Andreas Peichl & Sebastian Siegloch, 2012. "Distributional consequences of labor-demand shocks: the 2008–2009 recession in Germany," International Tax and Public Finance, Springer, vol. 19(1), pages 118-138, February.
- Deschenes, Olivier, 2013. "Green Jobs," IZA Policy Papers 62, Institute for the Study of Labor (IZA).
- Welsch, Heinz & Ochsen, Carsten, 2005. "The determinants of aggregate energy use in West Germany: factor substitution, technological change, and trade," Energy Economics, Elsevier, vol. 27(1), pages 93-111, January.
- Falk, Martin & Koebel, Bertrand M, 2002. " Outsourcing, Imports and Labour Demand," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 567-86, December.
- Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2014.
"Exporting and labor demand: Micro-level evidence from Germany,"
ZEW Discussion Papers
14-013, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Andreas Lichter & Andreas Peichl & Sebastian Siegloch, 2014. "Exporting and Labor Demand: Micro-level Evidence from Germany," CESifo Working Paper Series 4668, CESifo Group Munich.
- Lichter, Andreas & Peichl, Andreas & Siegloch, Sebastian, 2013. "Exporting and Labor Demand: Micro-Level Evidence from Germany," IZA Discussion Papers 7494, Institute for the Study of Labor (IZA).
- Pestel, Nico, 2013. "Green Jobs: Erlebt Deutschland sein grünes Beschäftigungswunder?," IZA Standpunkte 58, Institute for the Study of Labor (IZA).
- Olivier Deschenes, 2010.
"Climate Policy and Labor Markets,"
NBER Working Papers
16111, National Bureau of Economic Research, Inc.
- Peichl, Andreas & Siegloch, Sebastian, 2012.
"Accounting for labor demand effects in structural labor supply models,"
Elsevier, vol. 19(1), pages 129-138.
- Peichl, Andreas & Siegloch, Sebastian, 2010. "Accounting for Labor Demand Effects in Structural Labor Supply Models," IZA Discussion Papers 5350, Institute for the Study of Labor (IZA).
- Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2009.
"Economic Impacts from the Promotion of Renewable Energy Technologies - The German Experience,"
Ruhr Economic Papers
156, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
- Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M. & Vance, Colin, 2010. "Economic impacts from the promotion of renewable energy technologies: The German experience," Energy Policy, Elsevier, vol. 38(8), pages 4048-4056, August.
- Ho, Mun S. & Morgenstern, Richard & Shih, Jhih-Shyang, 2008. "Impact of Carbon Price Policies on U.S. Industry," Discussion Papers dp-08-37, Resources For the Future.
- Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
- W. Erwin Diewert & T.J. Wales, 1989.
"Flexible Functional Forms and Global Curvature Conditions,"
NBER Technical Working Papers
0040, National Bureau of Economic Research, Inc.
- Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
- Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-68, August.
- Kemfert, Claudia & Welsch, Heinz, 2000. "Energy-Capital-Labor Substitution and the Economic Effects of CO2 Abatement: Evidence for Germany," Journal of Policy Modeling, Elsevier, vol. 22(6), pages 641-660, November.
When requesting a correction, please mention this item's handle: RePEc:iza:izapps:pp74. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.