TY - JOUR
T1 - The employment double dividend of environmental tax reforms: exploring the role of agent behaviour and social interaction
AU - Klein, Franziska
AU - van den Bergh, Jeroen
PY - 2020
Y1 - 2020
N2 - It has been long debated whether environmental tax reform (ETR), i.e. a revenue-neutral shift of the tax burden from labour to carbon emissions, can have a double dividend, in terms of climate and economic goals. So far this question has been addressed in public finance and environmental economics using models with rational and representative agents. Here we examine the relevance of deviating from these standard behavioural assumptions. Our motivation is that research from other fields indicates that impacts of both environmental and income taxation on households are sensitive to behavioural biases, such as habits, imitation or status seeking. A related feature is that consumers and firms are heterogeneous with respect to many characteristics, some of which are crucial for the distributional effects of a tax reform. We combine insights from social psychology and behavioural, evolutionary and labour economics to identify behavioural cases in which the impacts of an ETR is likely to differ significantly from those in the traditional framework. Our findings show that households' time use patterns and the distinction between extensive and intensive labour supply are relevant and deserve more attention.
AB - It has been long debated whether environmental tax reform (ETR), i.e. a revenue-neutral shift of the tax burden from labour to carbon emissions, can have a double dividend, in terms of climate and economic goals. So far this question has been addressed in public finance and environmental economics using models with rational and representative agents. Here we examine the relevance of deviating from these standard behavioural assumptions. Our motivation is that research from other fields indicates that impacts of both environmental and income taxation on households are sensitive to behavioural biases, such as habits, imitation or status seeking. A related feature is that consumers and firms are heterogeneous with respect to many characteristics, some of which are crucial for the distributional effects of a tax reform. We combine insights from social psychology and behavioural, evolutionary and labour economics to identify behavioural cases in which the impacts of an ETR is likely to differ significantly from those in the traditional framework. Our findings show that households' time use patterns and the distinction between extensive and intensive labour supply are relevant and deserve more attention.
UR - https://www.mendeley.com/catalogue/954429e6-4080-393b-ae38-440d0cc9cea0/
U2 - 10.1080/21606544.2020.1819433
DO - 10.1080/21606544.2020.1819433
M3 - Article
SN - 2160-6544
VL - 10
SP - 1
EP - 25
JO - Journal of Environmental Economics and Policy
JF - Journal of Environmental Economics and Policy
IS - 2
ER -