Economics at your fingertips  

Will a carbon tax hinder China’s efforts to improve its primary income distribution status?

Qian Wang and Qiao-Mei Liang

Mitigation and Adaptation Strategies for Global Change, 2015, vol. 20, issue 8, 1407-1436

Abstract: Global climate change has become a considerable threat and has raised widespread concern. The carbon (C) tax is a significant policy option for China to address climate change. However, China is also facing pressing domestic issues, such as the severe income disparity of the primary distribution, which have to be considered when introducing a C tax. Employing a recursive dynamic computable general equilibrium model and considering three labor market scenarios, this study aims to assess the impacts of taxing C on China’s primary income distribution from an economy-wide perspective. The results indicate that taxing C would reduce labor remuneration and its share of the primary distribution, with capital income and its share also decreasing, while net product tax and its share would increase, indicating that taxing C would further deteriorate China’s current primary income distribution status and damage both households and enterprises, while the government would benefit the most. However, in the long run, a low C tax will not strongly exacerbate the inequity in the primary income distribution. The results also indicate that the C tax would perform differently under different labor market scenarios, as well as under different critical elasticity values, which indicates that the complex features of China’s labor market and the development of production technology during the transition period should be taken into consideration when introducing a C tax. Moreover, all scenarios could clearly reduce carbon dioxide (CO 2 ) emissions, with the reduction under the labor-surplus scenario being more obvious. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Carbon tax; Computable general equilibrium; Primary income distribution; Labor market; Environmental economics (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

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:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s11027-014-9553-8

Access Statistics for this article

Mitigation and Adaptation Strategies for Global Change is currently edited by Robert Dixon

More articles in Mitigation and Adaptation Strategies for Global Change from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2020-10-18
Handle: RePEc:spr:masfgc:v:20:y:2015:i:8:p:1407-1436