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Fossil fuel subsidies, income inequality and poverty. Evidence from developing countries

Cécile Couharde and Sara Mouhoud

No 2018-42, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: The past two decades have witnessed widespread attempts to reform fossil fuel subsidies in developing countries. If the reforms are likely to improve economic efficiency, the expected effects on income distribution and poverty are more controversial. This paper reviews the recent literature that examines the impacts of fossil fuel subsidies and their reform on income inequality and poverty. It identifies the different channels that have been explored in the literature and surveys the empirical evidence on the importance ofthese channels in practice. Drawing on diverse country experiences, it also discusses why fossil fuel subsidies are particularly challenging to reform and highlights several ways in which efforts to reform may be feasible and successful.

Keywords: fossil fuel subsidies; developing countries; distributional impact; subsidy reform (search for similar items in EconPapers)
JEL-codes: E62 H71 I32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene
Date: 2018
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