Distributional Effects of Carbon Pricing in Germany

Malte Preuss, Wolf Heinrich Reuter and Christoph Schmidt

FinanzArchiv: Public Finance Analysis, 2021, vol. 77, issue 3, 287-316

Abstract: Using detailed German survey data on the consumption expenditure of households, we look at the distributional effects of a uniform carbon price. While carbon pricing itself results in a regressive effect, various strategies for redistributing the ensuing revenues could reverse this result, generating a progressive effect. The combined effect is less progressive if the revenue is used to reduce electricity taxes - which would spur the desired electrification of the energy system - and more progressive if it is used for per capita lump-sum transfers. However, adjustments to the German income support system could even out these differences.

Keywords: climate policy; carbon pricing; distributional effects (search for similar items in EconPapers)
JEL-codes: H23 Q52 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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DOI: 10.1628/fa-2021-0011

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