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Do Carbon Taxes Kill Jobs? Firm-Level Evidence From British Columbia

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  • DEVEN AZEVEDO

    (Department of Economics, London School of Economics and Political Science, UK)

  • HENDRIK WOLFF

    (��Department of Geography and Environment, London School of Economics and Political Science, UK)

  • AKIO YAMAZAKI

    (��National Graduate Institute for Policy Studies, Japan§Department of Economics, University of Calgary, Canada)

Abstract

This paper investigates the employment impacts of British Columbia’s revenue neutral carbon tax. Using the synthetic control method with firm-level data, we find considerable heterogeneity in employment responses to the policy. We show that firm size matters. In particular, the carbon tax had a negative impact on large emission-intensive firms, but simultaneous tax cuts and transfers increased the purchasing power of low income households, substantially benefiting small businesses in the service sector and food/clothing manufacturing. Furthermore, we find that aggregate employment was not adversely affected by the policy. Our results provide additional insight for the “job-shifting hypothesis†of revenue neutral carbon taxes.

Suggested Citation

  • Deven Azevedo & Hendrik Wolff & Akio Yamazaki, 2023. "Do Carbon Taxes Kill Jobs? Firm-Level Evidence From British Columbia," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 14(02), pages 1-46, May.
  • Handle: RePEc:wsi:ccexxx:v:14:y:2023:i:02:n:s2010007823500100
    DOI: 10.1142/S2010007823500100
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    References listed on IDEAS

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    Cited by:

    1. Sileci, Lorenzo, 2023. "Carbon pricing with regressive co-benefits: evidence from British Columbia’s carbon tax," LSE Research Online Documents on Economics 121047, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Carbon tax; employment; unilateral climate policy; firms;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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