Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/234091
Authors: 
Bijnens, Gert
Hutchinson, John
Konings, Jozef
Saint Guilhem, Arthur
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2537
Abstract: 
Increased investment in clean electricity generation or the introduction of a carbon tax will most likely lead to higher electricity prices. We examine the effect from changing electricity prices on manufacturing employment. Analyzing firm-level data, we find that rising electricity prices lead to a negative impact on labor demand and investment in sectors most reliant on electricity as an input factor. Since these sectors are unevenly spread across countries and regions, the labor impact will also be unevenly spread with the highest impact in Southern Germany and Northern Italy. We also identify an additional channel that leads to heterogeneous responses. When electricity prices rise, financially constrained firms reduce employment more than less constrained firms. This implies a potentially mitigating role for monetary policy.
Subjects: 
environmental regulation
labor demand
employment
manufacturing industry
monetary policy
JEL: 
E52
H23
J23
Q48
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4537-0
Document Type: 
Working Paper

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