Published online by Cambridge University Press: 10 May 2017
A severance tax can provide local jurisdictions with additional revenues to finance economic development, yet the imposition of a tax may create coal industry employment losses. This research analyzes this issue by examining the demand for Pennsylvania steam coal, providing estimates of the unconditional own price elasticities of demand for coal in each of two demand regions. These estimates in conjunction with labor/output coefficient estimates are used to determine the extent to which coal employment in a region already witnessing slow mining industry growth will be negatively affected.
The authors gratefully acknowledge the helpful comments of two anonymous reviewers.