Energy Efficiency as Employment Protection: Firm-Level Evidence from Electricity Price Shocks in Emerging Markets

Electricity price volatility is reshaping the competitive landscape for firms in emerging markets, yet evidence on how firms can shield jobs from these shocks is scarce. We provide the first high-frequency, multi-country causal estimates of how firm-level energy efficiency adoption moderates the labor market impact of electricity price spikes. Using quarterly-matched commercial tariff data and firm responses from the World Bank Business Pulse Survey (2019–2023) across 16 emerging economies, we implement a triple-difference identification strategy that interacts sectoral energy intensity with firm-level efficiency practices, instrumented by peer adoption rates. We find that a 1% increase in electricity prices reduces employment by 1.5% in energy-intensive firms without efficiency measures—nearly triple the average effect—while efficiency adopters suffer minimal losses and sometimes gain productivity. By quantifying the job-protection role of efficiency, our results reframe the policy trade-off between broad energy subsidies and targeted efficiency support, offering actionable guidance for fiscal policy and green industrial strategies in volatile energy markets. JEL Classification : D22, L25, Q41, Q43, O13.