The impact of energy prices on socioeconomic and environmental performance: Evidence from French manufacturing establishments, 1997–2015

This paper evaluates the impacts of large increases in energy prices on socioeconomic and environmental performance of French manufacturing establishments over the period of 1997–2015. We identify energy price effects using a shift-share instrument for establishment-specific prices. Our results highlight trade-offs between environmental and socioeconomic goals: increases in energy prices reduce substantially energy consumption and CO2 emissions, modestly employment and productivity, and have no effects on wages. Energy price impacts are larger in the long-run than in the short-run, except for productivity, as capital deepening exacerbates job destruction but mitigates efficiency losses, and slightly biased towards technicians and against manual workers. Long-term trade-offs remain however limited even for large historical price variation, with a 10% reduction in CO2 emissions costing only 0.9% jobs. While employment effects are bigger in large establishments, negative wage effects emerge for small establishments pointing to different labour market adjustments. Importantly, our results imply that the employment impact of a € 56 carbon would be fully concentrated in larger establishments of trade-exposed, energy-intensive sectors.