TY  - JOUR
AU  - Deschenes,Olivier
TI  - Climate Policy and Labor Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16111
PY  - 2010
Y2  - June 2010
UR  - http://www.nber.org/papers/w16111
L1  - http://www.nber.org/papers/w16111.pdf
N1  - Author contact info:
Olivier Deschenes
Department of Economics
2127 North Hall
University of California, Santa Barbara
Santa Barbara, CA 93106
Tel: 805/893-5617
Fax: 805/893-8830
E-Mail: olivier@econ.ucsb.edu
M1  - published as Olivier Deschênes. "Climate Policy and Labor Markets," in Don Fullerton and Catherine Wolfram, editors, "The Design and Implementation of U.S. Climate Policy" University of Chicago Press (2012)

M3  - presented at "The Design & Implementation of US Climate Policy", May 13-14, 2010
AB  - 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%.
ER  -