Environmental taxes and labor-market distortions
January 1994
Article
pp 655-683.
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It is sometimes argued that by using the revenues from environmental taxes to reduce distortionary taxes on labor, governments can reap a ‘double dividend’, namely, not only an improvement in environmental quality, but also a reduction in the efficiency costs associated with raising public revenue. By employing a general equilibrium model, this paper finds that, contrary to common wisdom, environmental taxes typically render the overall tax system a less efficient instrument to finance public spending. Furthermore, high estimates for the marginal efficiency costs of existing taxes weaken, rather than strengthen, the case for environmental taxes.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- H23 : Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q28 : Government Policy
Automatically Extracted Terms
- labor
- effect
- commodity
- revenue
- mooij /european journal
- consumption
- income
- welfare
- economy
- production
- tax base
- supply
- household
- tax system
- employment
- tax rate
- journal
- input
- price
- labor income
