Work in progress

Inside Out: The Allocative Impact of Firms’ Make-or-Buy Decisions on Aggregate Energy Intensity, with Giacomo Romanini (JMP)

The power of industrial policy: the global impact of chinese subsidies on solar innovation and emissions reduction, with David Hémous and Claudia Gentile (Draft coming soon!)

Solar panel production costs have experienced a dramatic decline in the last two decades. This trend is concomitant with the remarkable rise of China as a global solar producer, in part sparked by industrial policies. We study the impact of the introduction of subsidies for the solar manufacturing sector in China on innovation, emissions reduction, and output at the global level. We use firm-level patent data to show that the increase in Chinese competition in the solar PV manufacturing sector driven by the policy had a negative impact on innovation in the rest of the world. Building on this observation, we develop an open economy growth model with endogenous innovation in solar and non-solar energy technologies to evaluate the overall effect of Chinese industrial policies on solar panel costs, through their counteracting effects on domestic and foreign innovation, combined with their positive effects on production. Our preliminary calibration using US and Chinese data highlights the crucial role of the global innovation response. In the short run, industrial policies have an unambiguously positive impact on the development of the solar energy sector. However, in the long run, the impact on the solar sector is positive with exogenous technological changes, while it turns negative once the global innovation response is taken into account, delaying the clean transition.

Carbon Tax and Labor Reallocation: The Role of Firm Heterogeneity and Energy Efficiency, with François Fontaine and Katheline Schubert

This paper examines how firm-level heterogeneity in energy efficiency shapes labor reallocation in response to carbon taxation. Using French administrative data, we document a strong positive correlation between value-added per unit of labor and per unit of energy, with more energy-efficient firms exhibiting higher hiring rates. To analyze the impact of an increase in carbon taxation, we develop a structural search and matching model incorporating firm differences in productivity, energy intensity, and energy mix. We find that a carbon tax operates as a firm-specific productivity shock, generating heterogeneous employment responses and inducing substantial worker reallocation across firms. While labor market frictions give rise to short-run employment and wage adjustments, the resulting reallocation toward more energy-efficient and lower-emission firms amplifies the environmental impact of the policy.

Firms’ response to energy price shocks, with François Fontaine

Policy Reports

Choc de l’énergie, prix du carbon et emploi : une analyse sur données individuelles, Fontaine F., Marullaz C. (2023), Conseil d’Analyse Économique, Focus 102, Novembre 2023