The Effects of a 2016 Electricity Tax Reform on French Manufacturing Evidence from Micro-Panel Data

Melanie Marten ()
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Melanie Marten: CY Cergy Paris Université, THEMA

No 2024-02, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: This paper investigates the impact of a 2016 electricity tax reform on French manufacturing using micro-panel data spanning eight years. The reform introduced a tax reduction on electricity use contingent on gross electricity tax liability exceeding 0.5% of firm value-added. Firms that satisfy the threshold criteria are considered electro-intensive. This paper exploits both a differences-in-differences (DiD) and a regression discontinuity (RD) specification to estimate the effect of the preferential tax treatment granted to eligible firms. On average, electro-intensive firms experienced a relative drop in in their average electricity costs ranging between 12.5% and 19.5% in the post-reform period depending on the empirical approach. Nevertheless, results do not indicate that the reform had a significant or robust impact on either energy use input choices or on economic performance. Results cast doubt on the usefulness and necessity of the public policy vis-à-vis government revenues foregone.

Keywords: Electricity tax; Policy Evaluation; Manufacturing; France (search for similar items in EconPapers)
JEL-codes: L5 L6 Q48 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ene, nep-eur and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2024-02

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