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Environmental Tax and the Distribution of Income among Heterogeneous Workers

This paper analyzes the environmental tax policy issues when labor is heterogeneous. The objective is to assess whether an environmental tax policy could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, depending on the heterogeneity characteristics of labor and on the initial structure of the tax system, a policy mix could be designed in order to leave each class of worker unharmed. It consists of an increase in progressivity together with a decrease in the flat rate component of the wage tax.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number v08097.

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Length: 29 pages
Date of creation: Dec 2008
Date of revision: Nov 2009
Handle: RePEc:mse:cesdoc:v08097
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  1. Terkla, David, 1984. "The efficiency value of effluent tax revenues," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 107-123, June.
  2. Frank M. Gollop & Gregory P. Swinand, 1998. "From Total Factor to Total Resource Productivity: An Application to Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 577-583.
  3. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 1992. "A North American Free Trade Agreement: Analytical Issues and a Computational Assessment," The World Economy, Wiley Blackwell, vol. 15(1), pages 11-30, 01.
  4. Chao, Hung-po & Peck, Stephen, 2000. "Greenhouse gas abatement: How much? and Who pays?," Resource and Energy Economics, Elsevier, vol. 22(1), pages 1-20, January.
  5. Fernando Perera-Tallo & Hideo Konishi, 1997. "Existence of steady - state equium in an overlapping-generations model with production (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(3), pages 529-537.
  6. Hübler, Michael & Klepper, Gernot & Peterson, Sonja, 2008. "Costs of climate change: The effects of rising temperatures on health and productivity in Germany," Ecological Economics, Elsevier, vol. 68(1-2), pages 381-393, December.
  7. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
  8. Francesco Bosello & Roberto Roson & Richard S.J. Tol, 2005. "Economy-Wide Estimates of the Implications of Climate Change: Human Health," Working Papers 2005.97, Fondazione Eni Enrico Mattei.
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  10. Ostro, Bart D., 1983. "The effects of air pollution on work loss and morbidity," Journal of Environmental Economics and Management, Elsevier, vol. 10(4), pages 371-382, December.
  11. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 157-183, August.
  12. Metcalf, Gilbert E., 1999. "A Distributional Analysis of Green Tax Reforms," National Tax Journal, National Tax Association, vol. 52(n. 4), pages 655-82, December.
  13. Samakovlis, Eva & Huhtala, Anni & Bellander, Tom & Svartengren, Magnus, 2005. "Valuing health effects of air pollution--Focus on concentration-response functions," Journal of Urban Economics, Elsevier, vol. 58(2), pages 230-249, September.
  14. Mireille Chiroleu-Assouline & Mouez Fodha, 2005. "Double Dividend with Involuntary Unemployment: Efficiency and Intergenerational Equity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(4), pages 389-403, 08.
  15. James M. Poterba, 1993. "Global Warming Policy: A Public Finance Perspective," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 47-63, Fall.
  16. 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.
  17. Bovenberg, A.L. & de Mooij, R.A., 1994. "Environmental levies and distortionary taxation," Other publications TiSEM 4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
  18. Elliott, E Donald & Ackerman, Bruce A & Millian, John C, 1985. "Toward a Theory of Statutory Evolution: The Federalization of Environmental Law," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(2), pages 313-40, Fall.
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