A Microsimulation Model of the Distributional Impacts of Climate Policies

Hal Gordon (), Dallas Burtraw and Roberton Williams
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Hal Gordon: Resources for the Future

RFF Working Paper Series from Resources for the Future

Abstract: Carbon policies introduce potentially uneven cost burdens. Anticipating these outcomes is important for policymakers seeking to achieve an equitable outcome and can be politically important as well. This paper describes the details of a microsimulation model that utilizes the price and quantity changes predicted by economic models of carbon policies to make an estimation of economic incidence by income quintile or state, and potentially across other dimensions. After taking as inputs the aggregate output from partial or general equilibrium economic modeling, the microsimulation model uses data from the Consumer Expenditure Survey (CE), the State Energy Data System (SEDS), the National Income and Product Accounts (NIPA), estimations from the Congressional Budget Office (CBO), and the Haiku electricity model. These data sources are used to estimate the share of consumer and producer surplus changes that accrue to households in each income quintile and state. The model is unique among existing incidence models in its ability to drill down to the level of state incidence and to plug into a wide range of economic models.

Keywords: carbon price; carbon tax; emissions tax; cap and trade; distributional effects; equity; efficiency; incidence (search for similar items in EconPapers)
JEL-codes: H22 H23 Q52 Q54 (search for similar items in EconPapers)
Date: 2015-02-26
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-env
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