NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Climate Policy and Labor Markets

Olivier Deschenes

NBER Working Paper No. 16111
Issued in June 2010
NBER Program(s):   EEE

An important component of the debate surrounding climate legislation in the United States is its potential impact on labor markets. Theoretically the connection is ambiguous and depends on the sign of cross-elasticity of labor demand with respect to energy prices, which is a priori unknown. This paper provides some new evidence on this question by estimating the relationship between real electricity prices and indicators of labor market activity using data for 1976-2007. A key contribution of this analysis is that it relies on within-state variation in electricity prices to identify the models and considers all sectors of the U.S. economy rather than focusing only on the manufacturing sector. The main finding is that employment rates are weakly related to electricity prices with implied cross elasticity of full-time equivalent (FTE) employment with respect to electricity prices ranging from -0.16% to -0.10%. I conclude by interpreting these empirical estimates in the context of increases in electricity prices consistent with H.R. 2454, the American Clean Energy and Security Act of 2009. The preferred estimates in this paper suggest that in the short-run, an increase in electricity price of 4% would lead to a reduction in aggregate FTE employment of about 460,000 or 0.6%.

download in pdf format
   (363 K)

email paper

This paper is available as PDF (363 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16111

Published: Climate Policy and Labor Markets, Olivier DeschĂȘnes. in The Design and Implementation of U.S. Climate Policy, Fullerton and Wolfram. 2012

Users who downloaded this paper also downloaded these:
Kahn and Mansur w16538 How Do Energy Prices, and Labor and Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach
Metcalf, Mathur, and Hassett w16101 Distributional Impacts in a Comprehensive Climate Policy Package
Mansur w16116 Upstream versus Downstream Implementation of Climate Policy
Levinson w16109 Belts and Suspenders: Interactions Among Climate Policy Regulations
Corcoran and Evans w16097 Income Inequality, the Median Voter, and the Support for Public Education
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us