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Identifying rent-sharing using firms' energy input mix

Author

Listed:
  • Mertens, Matthias
  • Müller, Steffen
  • Neuschäffer, Georg
Abstract
We present causal evidence on the rent-sharing elasticity of German manufacturing firms. We develop a new firm-level Bartik instrument for firm rents that combines the firms' predetermined energy input mix with national energy carrier price changes. Reduced-form evidence shows that higher energy prices depress wages. Instrumental variable estimation yields a rent-sharing elasticity of approximately 0.20. Rent-sharing induced by energy price variation is asymmetric and driven by energy price increases, implying that workers do not benefit from energy price reductions but are harmed by price increases. The rent-sharing elasticity is substantially larger in small (0.26) than in large (0.17) firms.

Suggested Citation

  • Mertens, Matthias & Müller, Steffen & Neuschäffer, Georg, 2022. "Identifying rent-sharing using firms' energy input mix," IWH Discussion Papers 19/2022, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:192022
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Bartik instrument; energy prices; rent-sharing; wage inequality;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment

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