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Intergenerational effects of a green tax reform for a more sustainable social security system

Listed author(s):
  • De Miguel, Carlos
  • Montero, María
  • Bajona, Claustre

Green tax reforms are popular in some circles not only because of their direct effect on reducing pollution but also because their revenue capacity may allow to reduce other more distortionary taxes. Despite their potential benefits, the political implementation of green tax reforms is not straightforward. Changes in environmental taxes have different intergenerational effects which need to be taken into account when considering their political support among a country’s population. In this paper, we analyze the economic and intergenerational welfare effects of introducing a green tax reform to ameliorate the Spanish social security system. We consider two types of energy taxes: an energy-consumption tax and an energy input tax. We find that both types of reforms are favored by young individuals, but rejected by older generations. The number of generations supporting the reform depends crucially on the disutility that individuals derive from pollution, suggesting that an increase in environmental awareness may be needed for green tax reforms to be politically viable.

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File URL: http://www.sciencedirect.com/science/article/pii/S0140988315002480
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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 52 (2015)
Issue (Month): S1 ()
Pages: 117-129

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Handle: RePEc:eee:eneeco:v:52:y:2015:i:s1:p:s117-s129
DOI: 10.1016/j.eneco.2015.08.025
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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  1. de Miguel, Carlos & Manzano, Baltasar, 2011. "Green tax reforms and habits," Resource and Energy Economics, Elsevier, vol. 33(1), pages 231-246, January.
  2. Sagiri Kitao, 2014. "Sustainable Social Security: Four Options," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 756-779, October.
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  6. Habla, Wolfgang & Roeder, Kerstin, 2013. "Intergenerational aspects of ecotax reforms – An application to Germany," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 301-318.
  7. Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
  8. Thompson, Peter & Taylor, Timothy G, 1995. "The Capital-Energy Substitutability Debate: A New Look," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 565-569, August.
  9. Pearce, David, 2006. "The political economy of an energy tax: The United Kingdom's Climate Change Levy," Energy Economics, Elsevier, vol. 28(2), pages 149-158, March.
  10. Bosquet, Benoit, 2000. "Environmental tax reform: does it work? A survey of the empirical evidence," Ecological Economics, Elsevier, vol. 34(1), pages 19-32, July.
  11. Labandeira, Xavier & Labeaga, José M. & Rodríguez, Miguel, 2009. "An integrated economic and distributional analysis of energy policies," Energy Policy, Elsevier, vol. 37(12), pages 5776-5786, December.
  12. Bovenberg, A. Lans & Heijdra, Ben J., 1998. "Environmental tax policy and intergenerational distribution," Journal of Public Economics, Elsevier, vol. 67(1), pages 1-24, January.
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