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

55 Pages Posted: 19 Dec 2017

See all articles by Giovanni Marin

Giovanni Marin

University of Urbino

Francesco Vona

Observatoire Fran├žais des Conjonctures Economiques (OFCE) - Department for Research on Innovation and Competition

Date Written: December 18, 2017

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 establishment-specific 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 an 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 energy-intensive 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-establishment firms by labor reallocation across establishments.

Keywords: Energy Prices, Establishment Performance, Environmental and Energy Policy

JEL Classification: Q52, Q48, H23, D22

Suggested Citation

Marin, Giovanni and Vona, Francesco, The Impact of Energy Prices on Employment and Environmental Performance: Evidence from French Manufacturing Establishments (December 18, 2017). FEEM Working Paper No. 53.2017. Available at SSRN: https://ssrn.com/abstract=3089662 or http://dx.doi.org/10.2139/ssrn.3089662

Giovanni Marin

University of Urbino ( email )

Via Saffi 2
Urbino, Pesaro-Urbino 61029
Italy

Francesco Vona (Contact Author)

Observatoire Fran├žais des Conjonctures Economiques (OFCE) - Department for Research on Innovation and Competition ( email )

250 rue Albert Einstein
Valbonne, 06560
France

HOME PAGE: http://www.ofce.sciences-po.fr/ofce/dric.htm

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