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Do energy prices affect employment? : Decomposed international evidence

  • This paper analyzes the energy price-employment nexus and contributes to the literature by showing that it is important to decompose the regulatory effect into demand, cost, and factor-shift effects. This is done by means of a cross-country multi-sectoral dataset. The results show that both rising energy prices and shadow prices of energy have no significant effect on net employment when the manufacturing sectors only are analyzed. While finding significant variations across countries, the average employment effects become significantly positive once jobs in the economy as a whole are considered. This change is driven mainly by larger positive cost effects, which more than offset the negative demand effects and reductions in the positive factor-shift effects. Moreover, the paper reveals that the often implemented approach of using a simple regulation regressor, instead of decomposing the employment effect, can result in biased estimates.

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Document Type:Article
Author:Erik HilleORCiD, Patrick Möbius
Chairs and Professorships:Chair of Macroeconomics
Parent Title (English):Journal of Environmental Economics and Management : JEEM
Place of publication:Amsterdam
Year of Completion:2019
First Page:1
Last Page:21
Tag:Energy prices; climate policy; employment; shadow prices
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:AJG Ranking / 3
VHB Ranking / B
Licence (German):License LogoUrheberrechtlich geschützt