This study estimates the effect of energy prices and carbon taxation on firms’ environmental and economic performance. The analysis uses data on 8 000 firms that are representative of the French manufacturing sector and observed during 2001-2016. The paper shows that (i) even though a 10% increase in energy prices causes a decline in energy use by 6% at the firm level, this increment has no effect on net employment at the industry level, but it motivates a reallocation of production and workers from energy intensive to energy-efficient firms. Our conclusion calls for complementary labour market policies that minimise costs on affected workers and ease between-firms adjustments in employment.
Read the blog post: Carbon tax, emissions reduction and employment: Some evidence from France
Economic growth has slowed down after a gradual recovery. Global economic conditions, monetary policy and structural reforms have supported exports and investment in recent years. However, global uncertainties and the effects of social unrests weighed on activity in 2018. Employment rates remain low and the fiscal situation has not recovered. Real wage growth and productivity gains have not returned to pre-crisis levels, despite a slight rebound in 2017-18.