Carbon Pricing and Inequality: A Normative Perspective

Saki Bigio, Diego Känzig, Pablo Sánchez and Conor Walsh

No 34125, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite broad acceptance among economists, carbon taxes face persistent public resistance. We measure the sources and distribution of welfare losses from unexpected European carbon price changes by estimating their impact on consumer prices, labor income, financial wealth, and government transfers. A 1% carbon-policy-induced increase in energy prices yields an average welfare loss of about 1.5% of a year’s consumption, primarily driven by indirect labor-income effects. Younger, poorer, and less educated households, especially in Southern and Eastern Europe, bear a disproportionate burden. These findings suggest public opposition to carbon taxes stems from legitimate distributional concerns.

JEL-codes: D31 H23 Q58 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur, nep-mac and nep-pub
Note: EEE EFG PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34125.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

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:nbr:nberwo:34125

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34125
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().