Abstract

http://ssrn.com/abstract=3355
 
 

Citations



 


 



Alleviating Unemployment: The Case for Green Tax Reforms


Ronnie Schöb


Freie Universitaet Berlin; CESifo (Center for Economic Studies and Ifo Institute)

Erkki Koskela


University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute); Bank of Finland - Research Department; Institute for the Study of Labor (IZA)

May 1996

CES Working Paper at Univ. of Munich 106

Abstract:     
It has been argued recently that imposing taxes on pollution produces additional tax revenues, which can then be used to replace labor taxes and thus reap a double dividend in the form of improving environmental quality and alleviating unemployment. This paper analyzes the employment effects of revenue-neutral green tax reforms by focusing on the revenue recycling effect on employment. Our model contains three features which are important when looking at the employment effects of green tax reforms: 1) there is unemployment in equilibrium; 2) wages are determined endogenously; and 3) various institutional arrangements for taxing unemployment benefits, for the price-indexation of unemployment benefits and for personal tax allowances are considered. The employment effects of a revenue-neutral green tax reform are sensitive to institutional arrangements concerning taxation and indexation of unemployment benefits and personal tax allowances. A revenue-neutral green tax reform will boost employment if unemployment benefits are untaxed and nominally fixed. Employment actually falls if unemployment benefits are taxed and price indexed. When employment changes, the functional distribution of income also changes. Total private income, after-tax profits and after-tax labor income increase with employment, while transfer income decreases. If the polluting good is normal, a positive employment effect reduces the environmental dividend obtained from a revenue-neutral green tax reform.

JEL Classification: H21, H22, H23, H25, J22, J3

working papers series


Not Available For Download

Date posted: September 10, 1996  

Suggested Citation

Schöb, Ronnie and Koskela, Erkki, Alleviating Unemployment: The Case for Green Tax Reforms (May 1996). CES Working Paper at Univ. of Munich 106. Available at SSRN: http://ssrn.com/abstract=3355

Contact Information

Ronnie Schöb (Contact Author)
Freie Universitaet Berlin ( email )
Boltzmannstr
Berlin, Berlin 14195
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Erkki Koskela
University of Helsinki - Department of Political and Economic Studies ( email )
P.O. Box 54
FIN-00014 Helsinki
Finland
+358 9 191 8894 (Phone)
+358 9 191 8877 (Fax)
HOME PAGE: http://www.cesifo.de/servlet/page?_pageid=56&_dad=portal30&_schema=PORTAL30&pa_id=7298
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Bank of Finland - Research Department ( email )
P.O. Box 160
FIN-00101 Helsinki
Finland
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Feedback to SSRN


Paper statistics
Abstract Views: 577

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.328 seconds