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The Double Dividend Hypothesis of Environmental Taxes: A Survey

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  • Ronnie Schöb

    (Otto-von-Guericke-University Magdeburg and CESifo, Munich)

Abstract

This survey reviews the recent literature on the double-dividend hypothesis of environmental taxes and discusses some extensions of the standard model such as the distributional consequences and the importance of the non-separability assumption between consumption goods and environmental quality for the optimal design of environmental policies. Turning to a model with imperfect labour markets we then show under which circumstances environmental taxes on polluting inputs in production and on polluting consumption goods can reap a second dividend in the form of an employment dividend and discuss the welfare implications. Finally, we turn to international aspects of environmental taxation. When environmental problems are tied to the use of exhaustible resources, resource-consuming countries can appropriate resource rents at the cost of resource-owning countries by levying environmental taxes strategically.

Suggested Citation

  • Ronnie Schöb, 2003. "The Double Dividend Hypothesis of Environmental Taxes: A Survey," Working Papers 2003.60, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2003.60
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    Cited by:

    1. Katri Kosonen & Gaetan Nicodeme, 2009. "The role of fiscal instruments in environmental policy," Taxation Papers 19, Directorate General Taxation and Customs Union, European Commission.
    2. Manel Antelo, 2005. "Double informational asymmetry, signaling, and environmental taxes," Economic Working Papers at Centro de Estudios Andaluces E2005/25, Centro de Estudios Andaluces.
    3. Ian W. H. Parry, 2003. "Fiscal Interactions and the Case for Carbon Taxes Over Grandfathered Carbon Permits," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(3), pages 385-399.
    4. Jean-Christophe Caffet, 2005. "Health effects and optimal environmental taxes in welfare state countries," Post-Print halshs-00194917, HAL.
    5. Jean-Christophe Caffet, 2005. "Health effects and optimal environmental taxes in welfare state countries," Cahiers de la Maison des Sciences Economiques v05049, Université Panthéon-Sorbonne (Paris 1).

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    More about this item

    Keywords

    Environmental taxation; Double-dividend hypothesis; Full-employment models; Unemployment models; International coordination;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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