disproportionately affected by energy price increases due to their limited flexibility in reducing energy consumption. Similarly, Sato et al. (2019) emphasize the employment risks in sectors with high energy dependency, particularly in regions with limited policy support for energy efficiency. Our study’s integration of industry-level energy intensity with firm-level adaptations provides a novel contribution by offering deeper insights into how electricity price changes propagate through different economic layers. Compared to earlier studies, such as Martin et al. (2014), which primarily focused on advanced economies or treated energy price impacts in aggregate terms, this paper uniquely highlights the heterogeneity of these effects across firms in developing countries, where structural constraints and varying levels of technological adoption exacerbate disparities in energy price impacts.

productivity and sales, but also as a critical buffer against adverse employment effects associated with rising electricity prices. This aligns with evidence from Bloom et al. (2010), who emphasize that firm-level innovations, including energy efficiency improvements, are key to maintaining competitiveness during economic transitions. Our findings also complement those by Newell et al. (2021), which highlight the role of energy efficiency in mitigating the labor market disruptions associated with volatile energy prices, particularly in energy-intensive sectors.

By focusing on developing economies, this study expands the literature on energy price shocks—which has predominantly centered on advanced economies—and addresses critical gaps in understanding the shocks’ differentiated effects. Consistent with Popp (2019), our results suggest that fostering widespread adoption of energy efficiency practices is essential for mitigating the employment risks of transitioning to greener energy systems. Particularly for energy-intensive industries in developing countries, these measures are crucial for safeguarding jobs and ensuring firms remain competitive amid fluctuating electricity prices and shifting global energy markets.

The rest of the paper is organized as follows. Section 2 describes the employed data. Section 3 explains the estimation methodology and identification. Section 4 discusses the estimation results and their robustness checks. Section 5 concludes.

# **2. Data**

Our analysis uses data from the Business Pulse Surveys (BPS) developed by the World Bank to monitor the impact of the COVID-19 pandemic on the private sector. The questionnaire collects information on several dimensions of firm performance, spanning from basic economic indicators—such as the operating status of the business, year of establishment, sales, and employment—as well as firm-specific practices such as managerial practices, technology adoption, and implementation of energy-efficient measures. Firms were surveyed from April 2020 (about end-2019 performance) to June 2023 in several waves, <mark>providing a unique perspectve on the private sector's response to the pandemic and the subsequent economic disturbances caused by the fast post-COVID-19 recovery, Russia’s invasion of Ukraine, and the associated energy price surges and fuctuatons.</mark> Our sample comprises an unbalanced panel of 63,716 observations drawn from 24 countries across four regions (Eastern and Central Europe, Latin America and the Caribbean, South Asia and the Pacific, and Sub4