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On the Optimal Use of Revenues from a CO2 Tax and the Importance of Labor Market Conditions

Kasarinlan: Philippine Journal of Third World Studies

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Title On the Optimal Use of Revenues from a CO2 Tax and the Importance of Labor Market Conditions
 
Creator Pereira, Alfredo Marvão
Pereira, Rui Marvão
 
Description This paper focuses on the environmental, economic and budgetary impacts of a carbon tax in the presence of mixed recycling strategies and a detailed modelling of labor market conditions, both employment and involuntary unemployment. This focus matches the terms of the policy debate in many small energy-importing economies. The revenue-recycling policies that appear most promising are those that use carbon tax revenue to finance investment tax credits, reductions in social security contributions and reductions in personal income taxes. Although none of these mechanisms would individually lead to simultaneous improvements in the three margins, a mixture of the three would. Our sensitivity analysis suggests that labor markets conditions are a critical factor in determining the possibility of generating these positive effects. Ignoring labor supply responses, employment and unemployment effects leads to systematic underreporting of the three dividends and thereby undermines the political viability of environmental tax reform.
 
Publisher SCHOLINK INC.
 
Contributor —
 
Date 2017-09-21
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.scholink.org/ojs/index.php/jepf/article/view/1088
10.22158/jepf.v3n4p481
 
Source Journal of Economics and Public Finance; Vol 3, No 4 (2017); p481
2377-1046
2377-1038
 
Language eng
 
Relation http://www.scholink.org/ojs/index.php/jepf/article/view/1088/1237
 
Rights Copyright (c) 2017 Alfredo Marvão Pereira, Rui Marvão Pereira
http://creativecommons.org/licenses/by/4.0