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Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence

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  • Maxim, Maruf Rahman
  • Zander, Kerstin

Abstract

This paper synthesises the simulation studies concerning green tax reform (GTR) and employment double dividend (EDD) in European and non-European countries. The studies included investigate the effect of GTR on employment. We compared the simulation results between European and non-European countries to understand the impact of study region and our findings are fivefold. First, the simulation results suggest that GTR-driven EDD is observed in both European and non-European countries, but the average effect on employment in European countries (0.67%) is significantly greater than in non-European countries (0.18%). Second, optimal tax and tax revenue recycling policies in European and non-European countries for EDD are not identical. Reducing employers’ social security contributions (SSC) has the potential to generate EDD in both countries. However, a reduction in value added tax has the highest average effect on employment in European countries (1.62%), which negatively affects employment in non-European countries (−0.02%). Third, a reduction in personal income tax as a tax recycling method creates a marginally average employment dividend in non-European countries (0.16%) but is counterproductive in European countries (−0.15%). Fourth, other taxes, which predominantly represent mixed taxes, exhibit the highest EDD potential in both European (1.01%) and non-European (0.46%) countries. Finally, employment dividend diminishes over time, but a weak quadratic pattern has been observed that reveals an accelerating effect on employment in the long term. These reflections should be considered before employing GTR in non-European countries in order to yield EDD.

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  • Maxim, Maruf Rahman & Zander, Kerstin, 2019. "Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence," MPRA Paper 93226, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:93226
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    Cited by:

    1. Gulcin Kaya Inceiplik & Onur Simşek, 2024. "Role of Green Taxes on Economic Growth Goals of Sustainable Development Directly and Through Environmental Performance: A System GMM Approach," Journal of Economy Culture and Society, Istanbul University, Faculty of Economics, vol. 69(69), pages 56-65, June.
    2. Maruf Rahman Maxim & Kerstin Zander, 2019. "Can a Green Tax Reform Entail Employment Double Dividend in European and non-European Countries? A Survey of the Empirical Evidence," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 218-228.
    3. Maruf Rahman Maxim, 2020. "Environmental fiscal reform and the possibility of triple dividend in European and non-European countries: evidence from a meta-regression analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(4), pages 633-656, October.
    4. Xu, Ye & Wen, Shuang & Tao, Chang-Qi, 2023. "Impact of environmental tax on pollution control: A sustainable development perspective," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 89-106.
    5. Maruf Rahman Maxim & Kerstin Zander, 2020. "Green Tax Reform and Employment Double Dividend in Australia Should Australia Follow Europe’s Footsteps? A CGE Analysis," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(4), pages 454-472, November.
    6. de Bruin, Kelly & Yakut, Aykut Mert, 2024. "Efficiency–equity trade-off in the Irish carbon tax: A CGE investigation of mixed revenue recycling schemes," Economic Modelling, Elsevier, vol. 134(C).
    7. Ferran Sancho, 2021. "The mitigation potential of eco-taxation on carbon emissions: income effects under downward rigid wages," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(1), pages 93-107, January.
    8. Kelly Bruin & Aykut Mert Yakut, 2023. "The Impacts of Removing Fossil Fuel Subsidies and Increasing Carbon Taxation in Ireland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(3), pages 741-782, August.

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    More about this item

    Keywords

    Green Tax Reform; Double Dividend; Employment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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