From Shadow to Green: Linking Environmental Fiscal Reforms and the Informal Economy
In the past few decades many papers have analysed in some depth different environmental tax reforms and the double dividend hypothesis, i.e. the possibility of improving not only the environment but also the economy through the reduction of distortions in the tax system. Recently, more stress has been placed on testing empirically what effects a reduction in labour taxes may have on unemployment when accompanied by a carbon or other environmental tax. However, such studies have not modelled the effects of the presence of a shadow economy, even though informal markets account for a significant and growing part of GDP in many developed economies. This paper analyses this link using an Applied General Equilibrium model for the case of Spain, which has one of the highest unemployment rates in the world and one of the biggest informal economies of any wealthy country. We conclude that our analysis strengthens the case for an environmental tax reform in Spain if revenues from a CO2 tax are recycled via a labour tax reduction.
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.:
- Rapanos, Vassilis T., 1995. "The effects of environmental taxes on income distribution," European Journal of Political Economy, Elsevier, vol. 11(3), pages 487-501, September.
- Carraro, Carlo & Galeotti, Marzio & Gallo, Massimo, 1996. "Environmental taxation and unemployment: Some evidence on the 'double dividend hypothesis' in Europe," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 141-181, October.
- Antonio Manresa & Ferran Sancho, 2002.
"Implementing a Double Dividend: Recycling Ecotaxes Towards Lower Labour Taxes,"
UFAE and IAE Working Papers
536.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Manresa, Antonio & Sancho, Ferran, 2005. "Implementing a double dividend: recycling ecotaxes towards lower labour taxes," Energy Policy, Elsevier, vol. 33(12), pages 1577-1585, August.
- Shoven,John B. & Whalley,John, 1992.
"Applying General Equilibrium,"
Cambridge University Press, number 9780521266550, November.
- 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.
- Christopher A. Pissarides, 1997.
"The Impact of Employment Tax Cuts on Unemployment and Wages: The Role of Unemployment Benefits and Tax Structure,"
CEP Discussion Papers
dp0361, Centre for Economic Performance, LSE.
- Pissarides, Christopher A., 1998. "The impact of employment tax cuts on unemployment and wages; The role of unemployment benefits and tax structure," European Economic Review, Elsevier, vol. 42(1), pages 155-183, January.
- Christopher Pissarides, 1997. "The impact of employment tax cuts on unemployment and wages : the role of unemployment benefits and tax structure," LSE Research Online Documents on Economics 2332, London School of Economics and Political Science, LSE Library.
- Fæhn, Taran & Gómez-Plana, Antonio G. & Kverndokk, Snorre, 2005.
"Can a carbon permit system reduce Spanish unemployment?,"
26/2004, Oslo University, Department of Economics.
- 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, Statistics Norway, Research Department.
- Bovenberg, A Lans & Goulder, Lawrence H, 1996.
"Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses,"
American Economic Review,
American Economic Association, vol. 86(4), pages 985-1000, September.
- A. Lans Bovenberg & Lawrence H. Goulder, 1994. "Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses," NBER Working Papers 4897, National Bureau of Economic Research, Inc.
- Blanchflower, D. & Oswald, A., 1989.
"The Wage Curve,"
340, London School of Economics - Centre for Labour Economics.
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
- González-Eguino, Mikel, 2011. "The importance of the design of market-based instruments for CO2 mitigation: An AGE analysis for Spain," Ecological Economics, Elsevier, vol. 70(12), pages 2292-2302.
- Schneider, Friedrich, 2011. "The Shadow Economy and Shadow Economy Labor Force: What Do We (Not) Know?," IZA Discussion Papers 5769, Institute for the Study of Labor (IZA).
- Friedrich Schneider & Andreas Buehn & Claudio E. Montenegro, 2011.
"Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to 2007,"
in: Handbook on the Shadow Economy, chapter 1
Edward Elgar Publishing.
- Schneider, Friedrich & Buehn, Andreas & Montenegro, Claudio E., 2010. "Shadow economies all over the world : new estimates for 162 countries from 1999 to 2007," Policy Research Working Paper Series 5356, The World Bank.
- Friedrich Schneider & Andreas Buehn & Claudio E. Montenegro, 2010. "Shadow Economies All over the World: New Estimates for 162 Countries from 1999 to 2007," Working Papers wp322, University of Chile, Department of Economics.
- Friedrich Schneider & Dominik Enste, 2000.
"Shadow Economies Around the World; Size, Causes, and Consequences,"
IMF Working Papers
00/26, International Monetary Fund.
- Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo Group Munich.
- Carlos de Miguel & Baltasar Manzano, 2011.
"Gradual Green Tax Reforms,"
04-2011, Economics for Energy.
- Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
- Bovenberg, A Lans & van der Ploeg, Frederick, 1998. " Tax Reform, Structural Unemployment and the Environment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(3), pages 593-610, September.
- Schneider, Friedrich, 2005.
"Shadow economies around the world: what do we really know?,"
European Journal of Political Economy,
Elsevier, vol. 21(3), pages 598-642, September.
- Friedrich Schneider, 2004. "Shadow Economies around the World: What do we really know?," IAW Discussion Papers 16, Institut für Angewandte Wirtschaftsforschung (IAW).
- Anil Markandya & Mikel González-Eguino & Marta Escapa, 2012.
"Environmental Fiscal Reform and Unemployment in Spain,"
- Anil Markandya & Mikel GonzÃ¡lez- Eguino & Marta Escapa, 2012. "Environmental fiscal reform and unemployment in Spain," Chapters, in: Carbon Pricing, Growth and the Environment, chapter 1, pages 3-16 Edward Elgar Publishing.
- David G. Blanchflower & Andrew J. Oswald, 2005.
"The Wage Curve Reloaded,"
NBER Working Papers
11338, National Bureau of Economic Research, Inc.
- Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-48, July.
- Alberto Majocchi, 1996. "Green fiscal reform and employment: A survey," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 8(4), pages 375-397, December.
- Bovenberg, A.L. & Goulder, L.H., 1996. "Optimal environmental taxation in the presence of other taxes : General equilibrium analyses," Other publications TiSEM 5d4b7517-c5c8-4ef6-ab76-3, Tilburg University, School of Economics and Management.
- David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
- Namkee Ahn & Sara La De Rica, 1997. "The underground economy in Spain: an alternative to unemployment?," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 733-743.
- Anil Markandya & Andrea Bigano & Roberto Porchia (ed.), 2010. "The Social Cost of Electricity," Books, Edward Elgar Publishing, number 13446.
- Bento, Antonio M. & Jacobsen, Mark, 2007. "Ricardian rents, environmental policy and the `double-dividend' hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 17-31, January.
- Bovenberg, A. Lans & Goulder, Lawrence H., 1997. "Costs of Environmentally Motivated Taxes in the Presence of Other Taxes: General Equilibrium Analyses," National Tax Journal, National Tax Association, vol. 50(1), pages 59-88, March.
- Christopher Bajada & Friedrich Schneider, 2009. "Unemployment and the Shadow Economy in the oecd," Revue économique, Presses de Sciences-Po, vol. 60(5), pages 1033-1067.
- Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer, vol. 2(2), pages 157-183, August.
- Koskela, Erkki & Schob, Ronnie, 1999. "Alleviating unemployment:: The case for green tax reforms," European Economic Review, Elsevier, vol. 43(9), pages 1723-1746, October.
- Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11, pages 109-149, 05.
When requesting a correction, please mention this item's handle: RePEc:bcc:wpaper:2012-03. 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: (Sergio Faria)
If references are entirely missing, you can add them using this form.