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Avoiding Adverse Employment Effects from Energy Taxation: What does it cost?

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Author Info
Geir H. Bjertnæs () (Statistics Norway)
Abstract

Welfare analysis of energy taxes typically shows that systems with uniform rates perform better than differentiated systems. However, most western countries include some exemptions for their energy-intensive export industry, and hence, avoid this potential welfare gain. Böhringer and Rutherford (1997) find that compared to a differentiated system, uniform taxation in combination with a wage subsidy preserve jobs in these industries at a fraction of the potential welfare gain in the German economy. This result holds in this Norwegian study where a more broad based subsidy scheme, represented by production dependent subsidies, is used to protect jobs in the Norwegian energy-intensive industry. However, the welfare cost per job preserved by this subsidy scheme amounts to about 60 percent of the wage cost per job, suggesting that these jobs are expensive to preserve.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 432.

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Date of creation: Sep 2005
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Handle: RePEc:ssb:dispap:432

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Related research
Keywords: Energy taxes; Political feasibility; Competitiveness; CGE models;

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Find related papers by JEL classification:
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Klette, T.J., 1998. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Memorandum 15/1998, Oslo University, Department of Economics.
    Other versions:
  2. A. Lans Bovenberg & Lawrence H. Goulder, 2000. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does it Cost?," NBER Working Papers 7654, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Richter, Wolfram F. & Schneider, Kerstin, 2003. "Energy taxation: Reasons for discriminating in favor of the production sector," European Economic Review, Elsevier, vol. 47(3), pages 461-476, June. [Downloadable!] (restricted)
  4. Herman Vollebergh & Jan Vries & Paul Koutstaal, 1997. "Hybrid carbon incentive mechanisms and political acceptability," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(1), pages 43-63, January. [Downloadable!] (restricted)
  5. Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy: Introduction," Discussion Papers Series, Department of Economics, Tufts University 0011, Department of Economics, Tufts University. [Downloadable!]
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  6. Felder, Stefan & Schleiniger, Reto, 2002. "Environmental tax reform: efficiency and political feasibility," Ecological Economics, Elsevier, vol. 42(1-2), pages 107-116, August. [Downloadable!] (restricted)
  7. Brita Bye & Karine Nyborg, 2003. "Are Differentiated Carbon Taxes Inefficient? A General Equilibrium Analysis," The Energy Journal, International Association for Energy Economics, vol. 24(2), pages 95-112.
  8. Bohringer, Christoph & Rutherford, Thomas F., 1997. "Carbon Taxes with Exemptions in an Open Economy: A General Equilibrium Analysis of the German Tax Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 189-203, February. [Downloadable!] (restricted)
  9. A. Lans Bovenberg & Lawrence H. Goulder, 2001. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does It Cost?," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 45-90 National Bureau of Economic Research, Inc. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Geir H. Bjertnæs, Taran Fæhn, Jørgen Aasness, 2008. "Designing an electricity tax system in presence of international regulations and multiple public goals: An empirical assessment," Discussion Papers 555, Research Department of Statistics Norway. [Downloadable!]
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