Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/177247 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 053.2017
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
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.
Subjects: 
Energy Prices
Establishment Performance
Environmental and Energy Policy
JEL: 
Q52
Q48
H23
D22
Document Type: 
Working Paper

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