The effect of energy prices and environmental policy stringency on manufacturing employment in OECD countries: Sector- and firm-level evidence

Abstract

OECD Working Papers should not be reported as representing the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the author(s).

Driving low-carbon innovations for climate neutrality

“…Empirical evidence suggests that knowledge market failures are particularly high for low-carbon technologies: for example, knowledge spillovers are 60% larger for low-carbon than for high-carbon technologies (Dechezleprêtre, Martin and Mohnen, 2014 [25]). The intensity of knowledge spillovers from low-carbon technologies is comparable to that of other emerging technologies such as IT and biotechnologies.…”

Labor Share, Industry Concentration and Energy Prices: Evidence from Europe

“…31 E.g., Dechezleprêtre et al (2020), Dussaux (2020), Bretschger and Jo (2021), Marin and Vona (2021).…”

“…A prominent explanation for the decline in the labor share put forward in the literature is the rise in industry concentration, which has also been shown to affect the investment rates and productivity growth (Covarrubias et al, 2020), business dynamism (Akcigit and Ates, 2021), and income inequality (Furman and Orszag, 2018). The recent empirical literature on the labor market effects of climate policy has documented that the estimated employment and output effects often correlate with firm size (Dechezleprêtre et al 2020;Dussaux 2020). A potential implication of these findings is that climate policies, in our case proxied by changing energy prices, might have first order effects on industry concentration, especially when there is heterogeneity in the exposure to aggregate price changes over the firm size distribution (Amiti et al, 2019).…”

“…Marin and Vona (2019) show that employment effects are heterogeneous across skill groups. Dechezleprêtre et al (2020) and Dussaux (2020) document heterogeneity in responses to energy price shocks across the firm size distribution.…”

Enhancing insolvency frameworks to support economic renewal

“…The green transition will have a broader impact on firm dynamics, including through high energy prices. In OECD countries, a 10% increase in energy prices is estimated to lead to a 7.5% increase in the number of firms exiting the market (Dechezleprêtre et al, 2020). At the same time, there is evidence that surviving firms increase their gross output in response to higher energy prices, which points to the importance of efficient reallocation.…”