Can a carbon permit system reduce Spanish unemployment?
AbstractThis paper analyses the impact of carbon policy on unemployment in Spain and whether recycling the public revenues earned from permit auctions can alleviate this problem. While Spain's deviation from the European Union's intermediate emission goals is more serious than most other member countries' unemployment in Spain is also well above average for the European Union. We use a computable general equilibrium model that includes unemployment in the markets for unskilled and skilled labour. We find that introducing carbon permits does not aggravate Spanish unemployment. In fact, if supplied with revenue recycling schemes, unemployment rates may actually fall. Contrary to other European studies, we find that the best option is to reduce payroll taxes on relatively skilled types of labour. This reform is successful in both increasing labour demand and dampening the supply response to rising wages. However, while all of the recycling schemes generate dividends in terms of aggregate welfare, none entirely offsets the abatement costs.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 31 (2009)
Issue (Month): 4 (July)
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Web page: http://www.elsevier.com/locate/eneco
Spanish unemployment Tax reform Emission permit auctions Employment dividend Computable general equilibrium models;
Other versions of this item:
- Taran Fæhn & Antonio G. Gómez-Plana & Snorre Kverndokk, 2005. "Can a carbon permit system reduce Spanish unemployment?," Discussion Papers 410, Research Department of Statistics Norway.
- Fæhn, Taran & Gómez-Plana, Antonio G. & Kverndokk, Snorre, 2005. "Can a carbon permit system reduce Spanish unemployment?," Memorandum 26/2004, Oslo University, Department of Economics.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
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