Environmental Tax and the Distribution of Income with Heterogeneous Workers

Mireille Chiroleu-Assouline () and Mouez Fodha ()

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper analyzes the environmental tax policy issues within an overlapping generations models framework. The objective is to analyze whether an environmental tax policy can respect the two equity principles simultaneously, the vertical as well the horizontal one. We characterize the necessary conditions for the obtaining of a Pareto improving shift when the revenue of the pollution tax is recycled by a change in the labor tax rate or by a change in the distributive properties of the labor tax. We show that, depending on the production function elasticities and on the heterogeneity characteristics of labor supply, an appropriate policy mix could be designed in order to leave each workers' class unharmed by the environmental tax reform. It will consist in an increase of the progressivity of the labor tax together with a decrease of the minimal wage tax rate.

Keywords: Environmental tax; overlapping generations model; double dividend; tax progressivity. (search for similar items in EconPapers)
JEL-codes: D60 D62 E62 H23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-env and nep-lab
Date: 2008-12

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Related works:
Working Paper: Environmental Tax and the Distribution of Income with Heterogeneous Workers (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:mse:cesdoc:v08097

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