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Employment Impacts of Climate Change Mitigation Policies in OECD: A General-Equilibrium Perspective

Author

Listed:
  • Jean Château

    (OECD)

  • Anne Saint-Martin

    (OECD)

  • Thomas Manfredi

    (OECD)

Abstract

Using a computable general equilibrium, this paper quantifies the GDP and employment effects of an illustrative greenhouse gas emissions reduction policy. The paper first analyses the direct negative economic effects of the emissions restrictions on GDP and examines labour sectoral reallocations in a framework where labour markets are perfectly flexible. The model is then modified to incorporate labour market imperfections in OECD countries that could generate unemployment, namely, short-run rigidities in real wage adjustment. It is shown that imperfect wage adjustment increases the cost of mitigation policy since unemployment increases in the short-run, but that the carbon tax revenue generated can be recycled so as offset some or all of this effect, notably when it is used to reduce wage-taxes. Thus, taking realistic labour market imperfections into account in a CGE model affects the GDP costs of mitigation policy in two ways: first by introducing extra costs due to the increased unemployment that such policy may entail; second by creating the possibility of a double dividend effect when carbon taxes are recycled so as to reduce distorting taxes on labour income.. A l’aide d’un modèle d’équilibre général calculable ce papier cherche à quantifier les effets sur l’emploi et le PIB d’une politique d’atténuation du changement climatique. Dans un premier temps, le papier analyse les effets négatifs directs sur le PIB d’une politique de réduction des émissions et examine les réallocations sectorielles de l’emploi, dans un cadre où les marchés du travail sont considérés comme parfaitement flexibles. Dans un second temps une hypothèse d’imperfection du marché du travail dans les pays de l’OCDE est adoptée, cette hypothèse peut créer du chômage en raison de rigidité dans l’ajustement des salaires réels. Dans un tel cas, il est montré que les recettes fiscales associées à une taxe carbone peuvent permettre de mettre en place des politiques d’emploi actives, telles des réductions des impôts sur les salaires, qui peuvent à court-terme contrecarrer l’effet négatif de la politique d’atténuation du changement climatique. Ainsi, la prise en compte dans un modèle EGC d’une imperfection du marché du travail altère la perception des effets sur le PIB des politiques de changement climatique de deux façons : premièrement en soulignant les coûts supplémentaires qu’une telle politique peut entraîner en termes d’emplois et secondement en créant des conditions favorables à l’apparition d’un phénomène de double-dividende associée à des politiques adéquates d’utilisation des recettes fiscales liées aux taxes carbones.

Suggested Citation

  • Jean Château & Anne Saint-Martin & Thomas Manfredi, 2011. "Employment Impacts of Climate Change Mitigation Policies in OECD: A General-Equilibrium Perspective," OECD Environment Working Papers 32, OECD Publishing.
  • Handle: RePEc:oec:envaaa:32-en
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    File URL: http://dx.doi.org/10.1787/5kg0ps847h8q-en
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    Citations

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    Cited by:

    1. Georg Licht & Bettina Peters & Christian Köhler & Franz Schwiebacher, 2014. "The Potential Contribution of Innovation Systems to Socio-Ecological Transition," WWWforEurope Deliverables series 4, WWWforEurope.
    2. Michele Raitano & Eleonora Romano & Pietro Zoppoli, 2016. "The sectorial intensity of production of renewable energy sources in Italy:measurement and effects on earnings," Working Papers 1, Department of the Treasury, Ministry of the Economy and of Finance.
    3. Valeria Costantini & Francesco Crespi & Elena Paglialunga, 2017. "The Employment Impact Of Private And Public Actions For Energy Efficiency: Evidence From European Industries," Departmental Working Papers of Economics - University 'Roma Tre' 0227, Department of Economics - University Roma Tre.
    4. Raitano, Michele & Romano, Eleonora & Zoppoli, Pietro, 2017. "Renewable energy sources in Italy: Sectorial intensity and effects on earnings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 117-127.

    More about this item

    Keywords

    carbon pricing; CGE model; chômage; climate change mitigation policy; modèle EGC; Politique d’atténuation du changement climatique; unemployment; valeur du carbone;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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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