IDEAS home Printed from https://ideas.repec.org/p/hhs/umnees/0571.html
   My bibliography  Save this paper

Modelling Consumer Demand and Household Labour Supply: Welfare Effects of Increasing Carbon Taxes

Author

Listed:
  • Brännlund, Runar

    (Department of Economics, Umeå University)

  • Nordström, Jonas

    (Department of Economics, Umeå University)

Abstract

The main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy. To achieve this objective we formulate and estimate an econometric model for non-durable consumer demand in Sweden that utilises micro- and macro-data. In the demand model male and female labour supply is included as conditioning goods. To account for possible changes in labour supply due to increasing carbon taxes we estimate separate labour supply functions for men and women. In the simulations we consider two revenue neutral scenarios that both imply a doubling of the CO2 tax; one that returns the revenues in the form of a lower VAT and one that subsidise public transport. One conclusion from the simulations is that the CO2 tax has regional distribution effects, in the sense that household living in sparsely populated areas carry a larger share of the tax burden.

Suggested Citation

  • Brännlund, Runar & Nordström, Jonas, 2001. "Modelling Consumer Demand and Household Labour Supply: Welfare Effects of Increasing Carbon Taxes," Umeå Economic Studies 571, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0571
    as

    Download full text from publisher

    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=73783&languageId=3&assetKey=ues571
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Blomquist, Soren, 1996. "Estimation methods for male labor supply functions How to take account of nonlinear taxes," Journal of Econometrics, Elsevier, vol. 70(2), pages 383-405, February.
    2. Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, vol. 86(4), pages 985-1000, September.
    3. Hylleberg, S. & Engle, R. F. & Granger, C. W. J. & Yoo, B. S., 1990. "Seasonal integration and cointegration," Journal of Econometrics, Elsevier, vol. 44(1-2), pages 215-238.
    4. Bovenberg, A.L. & Goulder, L.H., 1996. "Optimal environmental taxation in the presence of other taxes : General equilibrium analyses," Other publications TiSEM 5d4b7517-c5c8-4ef6-ab76-3, Tilburg University, School of Economics and Management.
    5. Browning, Martin & Meghir, Costas, 1991. "The Effects of Male and Female Labor Supply on Commodity Demands," Econometrica, Econometric Society, vol. 59(4), pages 925-951, July.
    6. Blundell, Richard W & Walker, Ian, 1982. "Modelling the Joint Determination of Household Labour Supplies and Commodity Demands," Economic Journal, Royal Economic Society, vol. 92(366), pages 351-364, June.
    7. Leung, Siu Fai & Yu, Shihti, 1996. "On the choice between sample selection and two-part models," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 197-229.
    8. Nichele, Veronique & Robin, Jean-Marc, 1995. "Simulation of indirect tax reforms using pooled micro and macro French data," Journal of Public Economics, Elsevier, vol. 56(2), pages 225-244, February.
    9. Robert A. Pollak, 1969. "Conditional Demand Functions and Consumption Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(1), pages 60-78.
    10. Lewbel, Arthur, 1996. "Demand Estimation with Expenditure Measurement Errors on the Left and Right Hand Side," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 718-725, November.
    11. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
    12. Blundell, Richard & Meghir, Costas, 1987. "Bivariate alternatives to the Tobit model," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 179-200.
    13. Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
    14. Deaton, Angus & Irish, Margaret, 1984. "Statistical models for zero expenditures in household budgets," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 59-80.
    15. Guido W. Imbens & Tony Lancaster, 1994. "Combining Micro and Macro Data in Microeconometric Models," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(4), pages 655-680.
    16. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    17. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    18. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    19. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-597, June.
    20. James Tobin, 1956. "Estimation of Relationships for Limited Dependent Variables," Cowles Foundation Discussion Papers 3R, Cowles Foundation for Research in Economics, Yale University.
    21. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, 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. Adriana Castaldo & Barry Reilly, 2007. "Do Migrant Remittances Affect the Consumption Patterns of Albanian Households?," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(1), pages 25-44.

    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. Brannlund, Runar & Nordstrom, Jonas, 2004. "Carbon tax simulations using a household demand model," European Economic Review, Elsevier, vol. 48(1), pages 211-233, February.
    2. Nordström, Jonas & Thunström, Linda, 2009. "The impact of tax reforms designed to encourage healthier grain consumption," Journal of Health Economics, Elsevier, vol. 28(3), pages 622-634, May.
    3. Jonas Nordström & Linda Thunström, 2011. "Economic policies for healthier food intake: the impact on different household categories," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(2), pages 127-140, April.
    4. Nordström, Jonas & Thunström, Linda, 2011. "Can targeted food taxes and subsidies improve the diet? Distributional effects among income groups," Food Policy, Elsevier, vol. 36(2), pages 259-271, April.
    5. Fadhuile, Adelaide & Lemarie, Stephane & Pirotte, Alain, 2011. "Pesticides Uses in Crop Production: What Can We Learn from French Farmers Practices?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103654, Agricultural and Applied Economics Association.
    6. West, Sarah E. & Williams III, Roberton C., 2007. "Optimal taxation and cross-price effects on labor supply: Estimates of the optimal gas tax," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 593-617, April.
    7. A. Montini, 1999. "I consumi alimentari delle famiglie italiane: un modello per le decisioni di consumo extradomestico utilizzando i microdati di spesa familiare," Working Papers 364, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Nordstrom, Jonas & Thunstrom, Linda, 2007. "Effects of Economic Policies Aimed at Encouraging a Healthier Grain Consumption," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria 6611, International European Forum on System Dynamics and Innovation in Food Networks.
    9. Sarah E. West & Roberton C. Williams, 2004. "Empirical Estimates for Environmental Policy Making in a Second-Best Setting," NBER Working Papers 10330, National Bureau of Economic Research, Inc.
    10. Seung-Rae Kim, 2002. "Environmental Taxes and Economic Welfare: The Welfare Cost of Gasoline Taxation in the U.S. 1959-1999," Public Economics 0201003, University Library of Munich, Germany, revised 11 May 2004.
    11. Kan, Kamhon & Fu, Tsu-Tan, 1997. "Analysis of Housewives' Grocery Shopping Behavior in Taiwan: An Application of the Poisson Switching Regression," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 397-407, December.
    12. Xavier Labandeira & José M. Labeaga & Miguel Rodríguez, 2006. "A Residential Energy Demand System for Spain," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 87-112.
    13. Gallet, Craig A., 2010. "The income elasticity of meat: a meta-analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-14.
    14. Goic, Marcel & Rojas, Andrea & Saavedra, Ignacio, 2021. "The Effectiveness of Triggered Email Marketing in Addressing Browse Abandonments," Journal of Interactive Marketing, Elsevier, vol. 55(C), pages 118-145.
    15. LaFrance, Jeffrey T., 2008. "The structure of US food demand," Journal of Econometrics, Elsevier, vol. 147(2), pages 336-349, December.
    16. Silvia Tiezzi & Stefano F. Verde, 2017. "The signaling effect of gasoline taxes and its distributional implications," RSCAS Working Papers 2017/06, European University Institute.
    17. Javier García-Enríquez & Cruz A. Echevarría, 2018. "Demand for culture in Spain and the 2012 VAT rise," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(3), pages 469-506, August.
    18. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    19. Charlene Ignanga & Yu Chen & Yining Zhao & Heguang Liu & Wen Yu, 2025. "Cross-Sectional Analysis of Household Food Demand in Estuaire Gabon: A Near-Ideal Quadratic Demand System Approach," Agriculture, MDPI, vol. 15(3), pages 1-14, January.
    20. David Aristei & Luca Pieroni, 2008. "A double-hurdle approach to modelling tobacco consumption in Italy," Applied Economics, Taylor & Francis Journals, vol. 40(19), pages 2463-2476.

    More about this item

    Keywords

    Consumer economics; demand analysis; energy taxation; labour supply;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hhs:umnees:0571. 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: David Skog (email available below). General contact details of provider: https://edirc.repec.org/data/inumuse.html .

    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.