IDEAS home Printed from https://ideas.repec.org/a/cpp/issued/v39y2013is2p53-66.html
   My bibliography  Save this article

GHG Mitigation Policies and Employment: A CGE Analysis with Wage Rigidity and Application to Canada

Author

Listed:
  • Yazid Dissou
  • Qian Sun

Abstract

We use a general equilibrium framework to assess the impact of carbon mitigation policies in the presence of labour market rigidities. We analyze the impact of reducing CO 2 emissions in a cap-and-trade system and the implications of different revenue-recycling options. Our results suggest that the policy has a negative impact on employment and welfare when permit revenues are recycled as lump-sum transfers to households. Using the carbon proceeds to reduce payroll tax achieves better outcomes, as the benefits outweigh the pure abatement cost. Moreover, using permit revenues to reduce payroll tax of low-skill workers alone represents the best option.

Suggested Citation

  • Yazid Dissou & Qian Sun, 2013. "GHG Mitigation Policies and Employment: A CGE Analysis with Wage Rigidity and Application to Canada," Canadian Public Policy, University of Toronto Press, vol. 39(s2), pages 53-66, August.
    • Handle: RePEc:cpp:issued:v:39:y:2013:i:s2:p:53-66
    as

    Download full text from publisher

    File URL: http://economics.ca/cgi/jab?journal=cpp&view=v39s2/CPPv39s2p053.pdf
    File Function: Full text
    Download Restriction: No access restriction except for the four most recent issues.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dissou, Yazid, 2005. "Cost-effectiveness of the performance standard system to reduce CO2 emissions in Canada: a general equilibrium analysis," Resource and Energy Economics, Elsevier, vol. 27(3), pages 187-207, October.
    2. Ian W.H. Parry & Roberton C. Williams III & Lawrence H. Goulder, 2002. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 25, pages 471-503, Edward Elgar Publishing.
    3. 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.
    4. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, December.
    5. Bovenberg, A. Lans & Goulder, Lawrence H. & Jacobsen, Mark R., 2008. "Costs of alternative environmental policy instruments in the presence of industry compensation requirements," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1236-1253, June.
    6. Ian W.H. Parry & Antonio M. Bento, 2002. "Tax Deductions, Environmental Policy, and the "Double Dividend" Hypothesis," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 22, pages 397-426, Edward Elgar Publishing.
    7. Dreze, Jacques H. & Malinvaud, Edmond, 1994. "Growth and employment: The scope of a European initiative," European Economic Review, Elsevier, vol. 38(3-4), pages 489-504, April.
    8. Lawrence H. Goulder & Ian W.H. Parry & Roberton C. Williams III & Dallas Burtraw, 2002. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 27, pages 523-554, Edward Elgar Publishing.
    9. Williams, Roberton III, 2002. "Environmental Tax Interactions when Pollution Affects Health or Productivity," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 261-270, September.
    10. repec:cii:cepiei:2013-q3-4-135-136-6 is not listed on IDEAS
    11. Bohringer, Christoph & Boeters, Stefan & Feil, Michael, 2005. "Taxation and unemployment: an applied general equilibrium approach," Economic Modelling, Elsevier, vol. 22(1), pages 81-108, January.
    12. Bento, Antonio M. & Jacobsen, Mark, 2007. "Ricardian rents, environmental policy and the `double-dividend' hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 17-31, January.
    13. Céline Guivarch & Renaud Crassous & Olivier Sassi & Stéphane Hallegatte, 2011. "The costs of climate policies in a second-best world with labour market imperfections," Climate Policy, Taylor & Francis Journals, vol. 11(1), pages 768-788, January.
    14. W. Reed Walker, 2011. "Environmental Regulation and Labor Reallocation: Evidence from the Clean Air Act," American Economic Review, American Economic Association, vol. 101(3), pages 442-447, May.
    15. David G. Blanchflower & Andrew Oswald, 1995. "International Wage Curves," NBER Chapters, in: Differences and Changes in Wage Structures, pages 145-174, National Bureau of Economic Research, Inc.
    16. Rivers, Nic, 2010. "Impacts of climate policy on the competitiveness of Canadian industry: How big and how to mitigate?," Energy Economics, Elsevier, vol. 32(5), pages 1092-1104, September.
    17. David G. Blanchflower & Andrew J. Oswald, 1995. "An Introduction to the Wage Curve," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 153-167, Summer.
    18. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Akama, Erick Maiko & Lokina, Razack & Mkenda, Beatrice Kalinda, 2023. "Clean production and Employment Outcomes: An Eco-efficiency Firm Level Analysis in Kenya," African Journal of Economic Review, African Journal of Economic Review, vol. 11(2), March.
    2. Wenbin Cao & Hui Wang & Huihui Ying, 2017. "The Effect of Environmental Regulation on Employment in Resource-Based Areas of China—An Empirical Research Based on the Mediating Effect Model," IJERPH, MDPI, vol. 14(12), pages 1-11, December.
    3. Yiwen Yu & Lili Ding & Yongyou Nie & Yun Pan & Zheng Jiao, 2024. "The Impact of Accountability for Energy Efficiency Targets on Labor Demand of Enterprises: Evidence from China’s Top-1000 Energy-Saving Program," Sustainability, MDPI, vol. 16(21), pages 1-19, October.
    4. Die Li & Jinsheng Zhu, 2019. "The Role of Environmental Regulation and Technological Innovation in the Employment of Manufacturing Enterprises: Evidence from China," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    5. Boureima Sawadogo, 2022. "Drought Impacts on the Crop Sector and Adaptation Options in Burkina Faso: A Gender-Focused Computable General Equilibrium Analysis," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    6. Bin Xiong & Xingdong Xie, 2024. "Impact of Environmental Regulation on the Employment Effect of High-Tech Industries: Evidence from Spatial Durbin Model," Sustainability, MDPI, vol. 16(18), pages 1-22, September.
    7. Zhao, Desen & Dou, Yao & Tong, Lu, 2022. "Effect of fiscal decentralization and dual environmental regulation on green poverty reduction: The case of China," Resources Policy, Elsevier, vol. 79(C).
    8. Yip, Chi Man, 2018. "On the labor market consequences of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 136-152.
    9. Li, Feiyang & Lin, Ziyue & Huang, Liangxiong & Yang, Caiting, 2022. "Environmental regulation and global value chain division position：Analysis based on global transnational data," Energy Policy, Elsevier, vol. 168(C).
    10. Yusen Gao & Changsheng Hu & Yue Yang, 2022. "Will tougher environmental policy reduce the employment of industrial enterprises? The heterogeneity analysis based on enterprise level and city level," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1810-1834, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iain Fraser & Robert Waschik, 2010. "The Double Dividend Hypothesis in a CGE Model: Specific Factors and Variable Labour Supply," Working Papers 2010.02, School of Economics, La Trobe University.
    2. Boeters, Stefan & Savard, Luc, 2013. "The Labor Market in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 1645-1718, Elsevier.
    3. Eddy Bekkers & Joseph Francois, 2014. "Bilateral Exchange Rates and Jobs," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 275-298, May.
    4. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel, 2011. "Is there a double-dividend from anti-sprawl policies?," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 135-152, March.
    5. Boeters, Stefan & Savard, Luc, 2011. "The labour market in CGE models," ZEW Discussion Papers 11-079, ZEW - Leibniz Centre for European Economic Research.
    6. Baltagi, Badi H. & Rokicki, Bartlomiej, 2014. "The spatial Polish wage curve with gender effects: Evidence from the Polish Labor Survey," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 36-47.
    7. Alfredo Marvao Pereira & Rui Marvao Pereira, 2019. "Achieving the triple dividend in Portugal: a dynamic general-equilibrium evaluation of a carbon tax indexed to emissions trading," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 22(2), pages 148-163, April.
    8. Baltagi, Badi H. & Baskaya, Yusuf Soner & Hulagu, Timur, 2012. "The Turkish wage curve: Evidence from the Household Labor Force Survey," Economics Letters, Elsevier, vol. 114(1), pages 128-131.
    9. Jacobs, Bas & de Mooij, Ruud A., 2015. "Pigou meets Mirrlees: On the irrelevance of tax distortions for the second-best Pigouvian tax," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 90-108.
    10. Anton Orlov & Harald Grethe, 2012. "Carbon Taxation in Russia: Relevance of Export Taxes on Energy Resources," EcoMod2012 4117, EcoMod.
    11. Kertesi, Gábor & Köllő, János, 2003. "Ágazati bérkülönbségek Magyarországon, II. rész. Járadékokon való osztozkodás koncentrált ágazatokban, szakszervezeti aktivitás jelenlétében [Pay differentials between industries in Hungary, II. Re," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1049-1074.
    12. Baltagi, Badi H. & Baskaya, Yusuf Soner & Hulagu, Timur, 2012. "The Turkish wage curve: Evidence from the Household Labor Force Survey," Economics Letters, Elsevier, vol. 114(1), pages 128-131.
    13. Kertesi, Gábor & Köllő, János, 2003. "Ágazati bérkülönbségek Magyarországon, I. rész. Az ágazati járadékképződés alternatív modelljei [Pay differentials between industries in Hungary. I. The basic models]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 923-938.
    14. Baltagi, Badi H. & Rokicki, Bartlomiej, 2013. "The Polish Wage Curve: Micro Panel Data Analysis Based on the Polish Labor Force Survey," IZA Discussion Papers 7812, Institute of Labor Economics (IZA).
    15. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
    16. Blanchflower, David G. & Oswald, Andrew J., 2006. "The Wage Curve: An Entry Written for the New Palgrave, 2nd Edition," IZA Discussion Papers 2138, Institute of Labor Economics (IZA).
    17. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 644-663, December.
    18. Ian W.H. Parry, 2005. "Fiscal Interactions and the Costs of Controlling Pollution from Electricity," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 849-869, Winter.
    19. Liu, Antung Anthony, 2012. "Tax Evasion and Optimal Environmental Taxes," RFF Working Paper Series dp-12-37, Resources for the Future.
    20. Henrik Jacobsen Kleven & Peter Birch Sørensen, "undated". "Labour Tax Reform, The Good Jobs and the Bad Jobs," EPRU Working Paper Series 99-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpp:issued:v:39:y:2013:i:s2:p:53-66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Iver Chong (email available below). General contact details of provider: https://www.utpjournals.press/loi/cpp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.