Complementarity between labor and energy: A firm-level analysis
Lucas Bretschger and
Ara Jo
Journal of Environmental Economics and Management, 2024, vol. 124, issue C
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.
Keywords: Market-based regulation; Employment; Elasticity of substitution (search for similar items in EconPapers)
JEL-codes: O33 Q40 Q54 Q55 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Complementarity between labor and energy: A firm-?level analysis (2021) 
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:124:y:2024:i:c:s0095069624000081
DOI: 10.1016/j.jeem.2024.102934
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