Asymmetric responses to severance tax changes: Coal production in West Virginia

Kyle Hoy

Energy Economics, 2023, vol. 125, issue C

Abstract: I use aggregate and mine-level data to analyze changes in coal production due to West Virginia imposing a 56 cent per short ton severance tax in 2005, as well as the effect of the tax's subsequent repeal in 2016. To do so, I construct a dataset of quarterly coal production for West Virginia and neighboring control states not exposed to changes in severance tax policy. Difference-in-differences results suggest that the severance tax increase had no significant effect on either aggregate or mine-level production. Conversely, I find that the severance tax decrease led to an 11.8% increase in aggregate coal production and a 24.4% increase in mine-level production.

Keywords: Coal; Severance tax; Difference-in-differences (search for similar items in EconPapers)
JEL-codes: H71 Q48 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:125:y:2023:i:c:s0140988323003389

DOI: 10.1016/j.eneco.2023.106840

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