Environmental regulations have important repercussions on the labor market. One of these repercussions concerns employment and the question inhowfar environmental policies generate or destroy employment. This topic is of high political relevance as the ongoing debate illustrates which is about desired job creation (environment as a "job machine") or feared job losses (environment as a "job killer"). While the current US literature points to small negative employment effects of environmental regulation, the European literature finds hardly any significant effects. This project tries to shed more light on this question by investigating by means of microeconometrical methods on the firm level the employment effects of environmental regulation as exemplified by the German electricity tax.