Advanced Search
MyIDEAS: Login to save this paper or follow this series

Taxation, Employment and the Environment - General Equilibrium Analysis with Unionised Labour Markets

Contents:

Author Info

  • Pekka Sinko
Registered author(s):

    Abstract

    We evaluate the effects of labour and environmental taxes in a general equilibrium model with unionised labour markets and involuntary unemployment. Environmental externality is related to the consumption of a polluting output. In particular, we examine whether a "double dividend" in terms of employment and the environment can be reaped with an environmentally motivated, revenue neutral tax reform. With unemployment benefits exempted from tax, we find that uncompensated increases in either labour income or environmental taxes lead to a lower equilibrium level of employment and polluting output. Numerical simulations with plausible parameter values show that employment will improve after the reform. The magnitude of the employment effect is considerable and depends positively on the share of polluting output in total consumption. However, due to the increased level of economic activity, environmental quality tends to deteriorate. This caveat can be avoided if tax cuts are targeted to the payroll tax in the non-polluting sector only. A prerequisite for the double dividend is that the elasticity of substitution between polluting and non-polluting consumption is large enough.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.vatt.fi/file/vatt_publication_pdf/t54.pdf
    Download Restriction: no

    File URL: http://www.vatt.fi/publications/latestPublications/publication/Publication_1345_id/38
    Download Restriction: no

    Bibliographic Info

    Paper provided by Government Institute for Economic Research Finland (VATT) in its series Research Reports with number 54.

    as in new window
    Length:
    Date of creation: 01 Jan 1999
    Date of revision:
    Handle: RePEc:fer:resrep:54

    Contact details of provider:
    Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki
    Phone: +358 295 519 400
    Fax: +358 295 519 599
    Email:
    Web page: http://www.vatt.fi/
    More information through EDIRC

    Order Information:
    Email:

    Related research

    Keywords: Double dividend; environmental taxes; unemployment; general equilibrium;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Pekka Sinko & Juha Kilponen, 2003. "Does Centralised Wage Setting Lead into Higher Taxation?," Discussion Papers 314, Government Institute for Economic Research Finland (VATT).

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:fer:resrep:54. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Niskanen).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.