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Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence

Maruf Maxim () and Kerstin Zander

MPRA Paper from University Library of Munich, Germany

Abstract: This paper synthesises the simulation studies concerning green tax reform (GTR) and employment double dividend (EDD) in European and non-European countries. The studies included investigate the effect of GTR on employment. We compared the simulation results between European and non-European countries to understand the impact of study region and our findings are fivefold. First, the simulation results suggest that GTR-driven EDD is observed in both European and non-European countries, but the average effect on employment in European countries (0.67%) is significantly greater than in non-European countries (0.18%). Second, optimal tax and tax revenue recycling policies in European and non-European countries for EDD are not identical. Reducing employers’ social security contributions (SSC) has the potential to generate EDD in both countries. However, a reduction in value added tax has the highest average effect on employment in European countries (1.62%), which negatively affects employment in non-European countries (−0.02%). Third, a reduction in personal income tax as a tax recycling method creates a marginally average employment dividend in non-European countries (0.16%) but is counterproductive in European countries (−0.15%). Fourth, other taxes, which predominantly represent mixed taxes, exhibit the highest EDD potential in both European (1.01%) and non-European (0.46%) countries. Finally, employment dividend diminishes over time, but a weak quadratic pattern has been observed that reveals an accelerating effect on employment in the long term. These reflections should be considered before employing GTR in non-European countries in order to yield EDD.

Keywords: Green Tax Reform; Double Dividend; Employment (search for similar items in EconPapers)
JEL-codes: E24 H21 H23 (search for similar items in EconPapers)
Date: 2019-04-08
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur, nep-mac and nep-pub
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Published in International Journal of Energy Economics and Policy 3.9(2019): pp. 219-228

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Journal Article: Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93226

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