Distributional Impacts in a Comprehensive Climate Policy Package

Gilbert Metcalf, Aparna Mathur () and Kevin Hassett

No 752, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: This paper provides a simple analytic approach for measuring the burden of carbon pricing that does not require sophisticated and numerically intensive economic models but which is not limited to restrictive assumptions of forward shifting of carbon prices. We also show how to adjust for the capital income bias contained in the Consumer Expenditure Survey, a bias towards regressivity in carbon pricing due to underreporting of capital income in higher income deciles in the Survey. Many distributional analyses of carbon pricing focus on the uses-side incidence of carbon pricing. This is the differential burden resulting from heterogeneity in consumption across households. Once one allows for sources-side incidence (i.e. differential impacts of changes in real factor prices), carbon policies look more progressive. Perhaps more important than the findings from any one scenario, our results on the progressivity of the leading cap and trade proposals are robust to the assumptions made on the relative importance of uses and sources side heterogeneity.

Date: 2010
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (21)

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Related works:
Chapter: Distributional Impacts in a Comprehensive Climate Policy Package (2011)
Working Paper: Distributional Impacts in a Comprehensive Climate Policy Package (2010)
Working Paper: Distributional Impacts in a Comprehensive Climate Policy Package (2010)
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