Lassi Ahlvik, University of Helsinki

Fossil fuel pricing and vulnerable households

Abstract

This paper studies the unequal impacts of fossil fuel pricing. Using household-level microdata from Finland during the 2022 European Energy Crisis and exploiting quasi-random contract expiration dates, we study how households respond to higher energy prices. We find that high- and middle-income households reduce energy use and modestly increase earnings, whereas low-income groups face rising defaults and cut back on their basic consumption. A longer adjustment period softens the shock, as households anticipate the price hike before it occurs. Finally, we use data to identify the vulnerable groups that experience pronounced negative effects from the shock.

Lassi Ahlvik is an Associate Professor in Environmental and Resource Economics at the University of Helsinki and Helsinki GSE. He is also an adjunct Associate Professor in Resource Economics at the University of Stavanger and a CEPR Research Affiliate.

You can read more about Lassi Ahlvik and his research here.

CEBI contact: Christina Gravert