Green tax reform and competitiveness

Erkki Koskela, Ronnie Schöb and Hans-Werner Sinn
Authors registered in the RePEc Author Service: Ronnie Schoeb

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This paper studies a revenue-neutral green tax reform that substitutes energy for wage taxes in an open economy with unemployment. As long as the labour tax rate exceeds the energy tax rate, such a reform will increase employment, reduce the domestic firms’ unit cost of production and hence increase international competitiveness and output of the economy. The driving force behind these results is the technological substitution process that a green tax reform will bring about. The resulting reduction in unemployment is welfare increasing since energy, which the country has to buy at its true national opportunity cost, is replaced with labour, whose price is above its social opportunity cost.

Date: 2001
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Published in German Economic Review 1 2(2001): pp. 19-30

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Related works:
Journal Article: Green Tax Reform and Competitiveness (2001)
Journal Article: Green Tax Reform and Competitiveness (2001)
Working Paper: Green Tax Reform and Competitiveness (2000)
Working Paper: Green Tax Reform and Competitiveness (1999)
Working Paper: Green Tax Reform and Competitiveness (1999)
Working Paper: Green Tax Reform and Competitiveness (1998)
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