Distributional Effects of Emission Pricing in a Carbon-Intensive Economy: The Case of Poland

23 Pages Posted: 29 Jul 2020

See all articles by Marek Antosiewicz

Marek Antosiewicz

Institute for Structural Research (IBS)

Rodrigo Fuentes

Pontificia Universidad Católica de Chile

Piotr Lewandowski

Institute for Structural Research (IBS)

Jan Witajewski-Baltvilks

Fondazione Eni Enrico Mattei (FEEM)

Abstract

In this paper, we assess the distributional impact of introducing a carbon tax in Poland. We apply a two-step simulation procedure. First, we evaluate the economy-wide effects with a dynamic general equilibrium model. Second, we use a microsimulation model based on household budget survey data to assess the effects on various income groups and on inequality. We introduce a new adjustment channel related to employment changes, which is qualitatively different from price and behavioural effects, and is quantitatively important. We nd that the overall distributional effect of a carbon tax is largely driven by how the revenue is spent: distributing the revenues from a carbon tax as lump-sum transfers to households reduces income inequality, while spending the revenues on a reduction of labour taxation increases inequality. These results could be relevant for other coal-producing countries, such as South Africa, Germany, or Australia.

JEL Classification: H23, P18, O15

Suggested Citation

Antosiewicz, Marek and Fuentes, Rodrigo and Lewandowski, Piotr and Witajewski-Baltvilks, Jan, Distributional Effects of Emission Pricing in a Carbon-Intensive Economy: The Case of Poland. IZA Discussion Paper No. 13481, Available at SSRN: https://ssrn.com/abstract=3654918 or http://dx.doi.org/10.2139/ssrn.3654918

Marek Antosiewicz (Contact Author)

Institute for Structural Research (IBS)

Rodrigo Fuentes

Pontificia Universidad Católica de Chile ( email )

Vicuña Mackena 4860
Macul
Santiago, Región Metropolitana 7820436
Chile

Piotr Lewandowski

Institute for Structural Research (IBS) ( email )

Wiśniowa 40B/8, 02-520
Warsaw
Poland

Jan Witajewski-Baltvilks

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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