Complementarity between labor and energy: A firm-level analysis
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Date
2024-03
Publication Type
Journal Article
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yes
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Abstract
This paper extends the literature on the potential negative employment effects of environmental policy by bringing to the fore a key factor that directly regulates its magnitude: the elasticity of substitution between labor and energy. Using firm-level data from the French manufacturing sector and addressing endogeneity concerns, we provide empirical estimates that point to strong complementarity between labor and energy. We then investigate the empirical relevance of the elasticity of substitution in studying firms’ response to changing energy prices. Our findings suggest that the negative employment effects of rising energy prices are largely driven by firms with limited substitution capacity.
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published
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Volume
124
Pages / Article No.
102934
Publisher
Elsevier
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Subject
Market-based regulation; Employment; Elasticity of substitution
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Is new version of: https://doi.org/10.3929/ethz-b-000511510