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Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study

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  • Audrey Berry

    (CIRED)

Abstract

For households, taxing carbon raises the cost of the energy they use to heat their home and to travel. This paper studies the distributional impacts of the recently introduced French carbon tax and the design of compensation measures. Using a microsimulation model built on a representative sample of the French population from 2012, I simulate for each household the taxes levied on its consumption of energy for housing and transport. Without recycling, the carbon tax is regressive and increases fuel poverty. However, I show how compensation measures can offset these impacts. A flat cash transfer offsets tax regressivity by redistributing

Suggested Citation

  • Audrey Berry, 2017. "Compensating households from carbon tax regressivity and fuel poverty: a microsimulation study," Policy Papers 2017.08, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:ppaper:2017.08
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    References listed on IDEAS

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    Cited by:

    1. Thomas Douenne, 2018. "The vertical and horizontal distributive effects of energy taxes," Policy Papers 2018.05, FAERE - French Association of Environmental and Resource Economists.

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    More about this item

    Keywords

    Carbon tax; Distributional impacts; Fuel poverty; Revenue recycling; Microsimulation;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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    This paper has been announced in the following NEP Reports:

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