The distributional impact of reversing a long path of energy subsidies

Jorge Pablo Puig, Thomas García, Alberto Porto, Julián Puig, Lourdes Rodriguez Chamuss and Evelyn Vezza

No 4830, Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política

Abstract: Reversing energy subsidies poses a complex policy challenge, with distributional effects being a central concern since such subsidies are often justified as protection for the most vulnerable households. This paper analyzes the case of the Buenos Aires Metropolitan Area (AMBA) in Argentina, where, after decades of substantial residential energy subsidies, a gradual reduction process has recently begun. A distinctive feature of this reform is the introduction of targeting mechanisms that segment users primarily by self-reported income. The subsidy rollback unfolded in a highly adverse macroeconomic context—marked by currency devaluation and high inflation—which also affected income distribution beyond the tariff adjustments themselves. Using microdata and administrative records, we document that subsidies, historically pro-rich yet progressive, are now better targeted and consequently even more progressive. Both the classification of users and the subsidy amounts assigned to each group reinforced this progressive shift. Nevertheless, the difficult macroeconomic environment has made the path toward improved distributional outcomes non-linear. The Argentine experience offers valuable lessons for other countries facing similar policy challenges.

JEL-codes: D31 D78 H22 Q48 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2025-12
References: Add references at CitEc
Citations:

Downloads: (external link)
https://aaep.org.ar/works/works2025/4830.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aep:anales:4830

Access Statistics for this paper

More papers in Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política Contact information at EDIRC.
Bibliographic data for series maintained by Juan Manuel Quintero ().