SOCIETÀ ITALIANA DI DIRITTO ED ECONOMIA
Claudia Nardone (Sapienza University of Rome)
Roberto Basile (Sapienza University of Rome)
Rosanna Pittiglio (”, University of Campania Luigi Vanvitelli)
Filippo Reganati (Sapienza University of Rome)
Abstract
Examining the impact of the EU Emissions Trading System (ETS) on firm performance is crucial for understanding the real consequences of one of the most important European environmental policies. This study investigates the effects of the EU-ETS on various indicators of Italian manufacturing firms’ performance, such as labor productivity, revenues, employment and value added on sales ratio. Utilizing company data from 2006 to 2020, we employ a novel Difference-in-Differences (DID) approach with multiple periods and multiple groups, drawing on the methodology proposed by Callaway and Sant’Anna (2021). The objective is to assess the causal impact of the EU ETS across three treatment groups corresponding to the three entry points into the regulatory system: first phase (2006), second phase (2008), and third phase (2013). The comparison is made against firms in the same sectors that were never subject to the regulation, serving as the control group. Our results reveal that the EU ETS fosters growth in labor productivity, albeit with heterogeneous effects depending on firms' entry timing. There's a dynamic effect observed, with longer exposure correlating to greater productivity gains. However, this positive effect seems to be driven more by workforce reduction than output augmentation, potentially due to outsourcing. Negative effects on the value-added-to-sales ratio suggest a shift towards a more fragmented production structure.