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The vertical and horizontal distributive effects of energy taxes

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  • Thomas Douenne

    (Paris School of Economics)

Abstract

This paper proposes a micro-simulation assessment of the distributional impacts of the French carbon tax. It shows that the policy is regressive, but could be made progressive by redistributing the revenue through a flat-recycling. However, it would still generate large horizontal distributive effects and harm an important share of low-income households. The determinants of the tax incidence are characterized precisely, and alternative targeted transfers are simulated on this basis. The paper shows that given the importance of unobserved heterogeneity in the determinants of energy consumption, horizontal distributive effects are much more difficult to tackle than vertical ones.

Suggested Citation

  • Thomas Douenne, 2018. "The vertical and horizontal distributive effects of energy taxes," Working Papers 2018.10, FAERE - French Association of Environmental and Resource Economists.
    • Handle: RePEc:fae:wpaper:2018.10
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Aubert, Diane & Chiroleu-Assouline, Mireille, 2019. "Environmental tax reform and income distribution with imperfect heterogeneous labour markets," European Economic Review, Elsevier, vol. 116(C), pages 60-82.
    2. Fleckinger, Pierre & Glachant, Matthieu & Tamokoué Kamga, Paul-Hervé, 2019. "Energy Performance Certificates and investments in building energy efficiency: A theoretical analysis," Energy Economics, Elsevier, vol. 84(S1).
    3. Douenne, Thomas & Fabre, Adrien, 2020. "French attitudes on climate change, carbon taxation and other climate policies," Ecological Economics, Elsevier, vol. 169(C).
    4. Cyril Bourgeois & Louis-Gaëtan Giraudet & Philippe Quirion, 2019. "Social-environmental-economic trade-offs associated with carbon-tax revenue recycling [Arbitrages économiques, sociaux et environnementaux pour le recyclage des revenus de la taxe carbone]," CIRED Working Papers hal-02073964, HAL.
    5. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    6. François Legendre, 2019. "The Emergence and Consolidation of Microsimulation Methods in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Études Économiques (INSEE), issue 510-511-5, pages 201-217.
    7. Sabine, Garabedian & Avotra, Narindranjanahary & Olivia, Ricci & Sandrine, Selosse, 2020. "A macroeconomic evaluation of a carbon tax in overseas territories: A CGE model for Reunion Island," Energy Policy, Elsevier, vol. 147(C).
    8. Sabine Garabedian & Avotra Narindranjanahary & Olivia Ricci & Sandrine Selosse, 2020. "A macroeconomic evaluation of a carbon tax in overseas territories: A CGE model for Reunion Island," Post-Print hal-03023346, HAL.
    9. Antonin Pottier & Emmanuel Combet & Jean-Michel Cayla & Simona de Lauretis & Franck Nadaud, 2021. "Who emits CO2? Landscape of ecological inequalities in France from a critical perspective," Working Papers 2021.14, Fondazione Eni Enrico Mattei.
    10. Thomas Douenne & Adrien Fabre, 2019. "Can We Reconcile French People with the Carbon Tax? Disentangling Beliefs from Preferences," Working Papers 2019.10, FAERE - French Association of Environmental and Resource Economists.
    11. Pottier, Antonin & Combet, Emmanuel & Cayla, Jean-Michel & de Lauretis, Simona & Nadaud, Franck, 2021. "Who emits CO2 ? Landscape of ecological inequalities in France from a critical perspective," FEEM Working Papers 311053, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    Energy taxes; Distributional effects; Demand-System; Micro-simulation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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