Carbon Pricing and Inequality: A Normative Perspective

Saki Bigio, Känzig, Diego, Sánchez, Pablo and Conor Walsh

No 20545, CEPR Discussion Papers from Centre for Economic Policy Research

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 leads to an average welfare loss of about 0.5% of a household’s three-year 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 could stem from legitimate distributional concerns.

Keywords: Carbon; pricing (search for similar items in EconPapers)
JEL-codes: D31 H23 Q58 (search for similar items in EconPapers)
Date: 2025-08
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20545 (application/pdf)

Related works:
Working Paper: Carbon Pricing and Inequality: A Normative Perspective (2025)
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:cpr:ceprdp:20545

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20545

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().