Jobs and Climate Policy: Evidence from British Columbia's Revenue-Neutral Carbon Tax

Abstract

This paper examines the employment impact of British Columbia’s revenue-neutral carbon tax implemented in 2008. While all industries appear to benefit from the redistributed tax revenues, the most carbon-intensive and trade-sensitive industries see employment fall with the tax, while clean service industries see employment rise. By aggregating across industries I find the BC carbon tax generated, on average, a small but statistically significant 0.74 percent annual increases in employment over the 2007-2013 period. This paper provides initial evidence showing how a revenue-neutral carbon tax may not adversely affect employment.

Keywords: environmental regulation; carbon tax; employment; unilateral climate policy

JEL Classification: E24, H23, J2, Q5