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Intergenerational Redistribution in the Green Transition

Author

Listed:
  • Jean-Guillaume Sahuc
  • Barbara Annicchiarico
  • Gauthier Vermandel

Abstract

We study the intergenerational distributional effects of carbon pricing during the green transition in an overlapping-generations New Keynesian model calibrated to euro-area household micro data. Climate policy generates systematic redistribution across cohorts through two channels: a labor-income channel, driven by wage compression and lower labor demand, and a financial-wealth channel, driven by asset revaluation and higher real returns. The labor- income channel dominates quantitatively , generating persistent welfare losses of up to 6 percent in permanent-consumption equivalents for working-age households, while retirees experience comparable gains. Revenue recycling can mitigate these asymmetries, requiring 40 to 68 per- cent of carbon-tax revenues to be directed toward financial-income tax relief. Monetary policy has limited influence on the overall redistributive pattern.

Suggested Citation

  • Jean-Guillaume Sahuc & Barbara Annicchiarico & Gauthier Vermandel, 2026. "Intergenerational Redistribution in the Green Transition," EconomiX Working Papers 2026-11, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2026-11
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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