Energy-tax changes and competitiveness: The role of adaptive capacity

This paper estimates the effect of energy tax (and price) changes on Total Factor Productivity (TFP) and net trade at the industry level, using a panel of industries from European countries covering the period 1990–2003. We investigate the hypothesis that industries with high adaptive capacity (meas...

Full description

Saved in:
Bibliographic Details
Published in:Energy economics 2015-03, Vol.48, p.127-135
Main Authors: Gonseth, Camille, Cadot, Olivier, Mathys, Nicole A., Thalmann, Philippe
Format: Article
Language:English
Subjects:
Adaptation
Climate policy
Competitiveness
Cost
Energy
Energy economics
Energy prices
Energy taxes
Environmental policy
Human capital
Industry
Net trade
Porter hypothesis
Price level changes
Prices
Productivity
Studies
Tax increases
Tax reform
Total factor productivity
Wages & salaries
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper estimates the effect of energy tax (and price) changes on Total Factor Productivity (TFP) and net trade at the industry level, using a panel of industries from European countries covering the period 1990–2003. We investigate the hypothesis that industries with high adaptive capacity (measured by their relative level of labour compensation) are able to mitigate the adverse effects of energy tax rises better than others. We identify the pro-adaptation effect by interacting wage levels (a proxy for human capital) with energy taxes. We find that the negative marginal effect of higher energy taxes on TFP and net trade is significantly reduced for industries with stronger human capital and even turns to an overall positive effect in at least two cases. Up to three low-wage sectors display an overall negative effect. This suggests that human capital is key to adaptation to higher energy costs and climate policy, in some cases making it a win-win. •Estimation of the effect of energy-tax changes on industry TFP and net trade.•Can sectors with high adaptive capacity mitigate negative effects?•Data: European manufacturing sectors tracked over the period 1990–2003.•Adaptability is key to reducing the impact of energy taxes.•It can even change the sign of the impact, making energy taxes a win-win.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2014.12.010