The Role of Firm Dynamics in the Green Transition: Carbon Productivity Decomposition in Finnish Manufacturing

Natalia Kuosmanen and Terhi Maczulskij

No 99, ETLA Working Papers from The Research Institute of the Finnish Economy

Abstract: Abstract This paper investigates the importance of firm dynamics, including entry and exit and the allocation of carbon emissions across firms, on the green transition. Using the 2000–2019 firm-level register data on greenhouse gas emissions matched with the Financial Statement data in the Finnish manufacturing sector, we examine the sources of carbon-productivity growth and assess the relative contributions of structural change and firm dynamics. We find that continuing firms were the main drivers of carbon productivity growth whereas the contribution of entering and exiting firms was negative. In addition, the allocation of emissions across firms seems to be inefficient; its impact on carbon productivity growth was negative over the study period. Moreover, we find that there is a positive relationship between labor-intensive firms and carbon productivity but that firms with a larger market share tend to be less productive in terms of carbon use.

Keywords: Carbon productivity; Decomposition; Firm dynamics; Firm-level data; Manufacturing (search for similar items in EconPapers)
JEL-codes: D24 L60 Q54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-12-13
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ene, nep-ent, nep-env, nep-eur, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The Role of Firm Dynamics in the Green Transition: Carbon Productivity Decomposition in Finnish Manufacturing (2023)
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