Climate Change Mitigation Policies: Aggregate and Distributional Effects

Tiago Cavalcanti, Zeina Hasna and Cezar Santos

No 12494, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: We evaluate the aggregate and distributional effects of climate change mitigation policies using a multi-sector equilibrium model with intersectoral input-output linkages and worker heterogeneity calibrated to different countries. The introduction of carbon taxes leads to changes in relative prices and inputs reallocation, including labor. For the United States, reaching its original Paris Agreement pledge would imply at most a 0.8% drop in output. This impact is distributed asymmetrically across sectors and individuals. Workers with a comparative advantage in dirty energy sectors who do not reallocate suffer a welfare loss at least six times larger than workers in other sectors, but constitute less than 2% of the US labor force.

Keywords: climate change; carbon taxes; Worker heterogeneity; Labor reallocation (search for similar items in EconPapers)
JEL-codes: E13 H23 J24 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-ene and nep-env
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Related works:
Working Paper: Climate Change Mitigation Policies: Aggregate and Distributional Effects (2021)
Working Paper: Climate Change Mitigation Policies: Aggregate and Distributional Effects (2021)
Working Paper: Climate Change Mitigation Policies: Aggregate and Distributional Effects (2020)
Working Paper: Climate Change Mitigation Policies: Aggregate and Distributional Effects (2020)
Working Paper: Climate Change Mitigation Policies: Aggregate and Distributional Effects (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:12494

DOI: 10.18235/0004535

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