Fuelling the green transition: the direct and indirect effects of fuel subsidy reforms in the Andean region

H. Xavier Jara, Pia Rattenhuber, David Rodríguez and Johana Silva

No wp-2026-76, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: The aim of this paper is to analyse the distributional effects of fuel subsidy reforms in four countries of the Andean region: Bolivia, Colombia, Ecuador, and Peru. The analysis combines tax-benefit microsimulation techniques with input-output analysis to estimate the direct and indirect distributional effects of the reforms, and the role played by enhanced social assistance in protecting vulnerable households. Our results show that the removal of fuel subsidies has a negative impact on household income, particularly for those at the bottom of the distribution, which increases poverty.

Keywords: Fuel subsidies; Income distribution; Microsimulation; Andean region; Benefits (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:wp-2026-76

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