Can a carbon permit system reduce Spanish unemployment?
AbstractThis paper analyses whether recycling revenues from carbon emission permit auctions can reduce unemployment in the Spanish economy. Spain's deviation from EU's intermediate emission goals is more serious than for most other EU countries, and the unemployment is also well above the EU average. We use a CGE model that includes a matching model with two types of labour, and which allows for different pricing rules and returns-to-scale assumptions. We find that abatement reduces unemployment due to beneficial impacts of recycling the revenue from permit sales. Unemployment is more effectively abated when revenues are used to reduce labour taxes rather than indirect taxes. Contrary to other studies of Europe, we find that the best option is to reduce payroll taxes on skilled labour. This reform is the most successful both in increasing demand and in dampening the supply response to rising wages. All the recycling schemes also generate dividends in terms of welfare, but none offset the abatement costs entirely.
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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 26/2004.
Length: 50 pages
Date of creation: 15 Dec 2005
Date of revision:
Publication status: Published in Energy Economics, 2009, pages 595-604.
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Spanish unemployment; Tax reform; Emission Permit Auctions; Employment dividend; Matching functions; Increasing returns to scale; Computable general equilibrium models;
Other versions of this item:
- Fæhn, Taran & Gómez-Plana, Antonio G. & Kverndokk, Snorre, 2009. "Can a carbon permit system reduce Spanish unemployment?," Energy Economics, Elsevier, vol. 31(4), pages 595-604, July.
- 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.
- 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)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
- NEP-CMP-2005-04-16 (Computational Economics)
- NEP-ENV-2005-04-16 (Environmental Economics)
- NEP-LAB-2005-04-16 (Labour Economics)
- NEP-PBE-2005-04-16 (Public Economics)
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