Conference Agenda

In this study, we conduct an ex-ante socio-economic assessment of a global climate policy implemented in a scenario where labour and capital are mobile at the international level. We start from a Computable General Equilibrium model that includes a carbon tax module and a simple migration module driven by the dynamics in the global labour market. We introduce in the model a uniform global carbon tax to achieve a 20% reduction in global CO₂ emissions. The results show an increase of world GDP after the introduction of the carbon tax, which is unexpected in the neoclassical framework adopted in this work. We then use a simplified theoretical model to interpret and generalize the results. The main reason for such global gain is capital and labour movement toward low emission intensive economies of Europe and North America. However, the unequal ratios between units of labour and population in the Global South and the Global North lead to a worsening of GDP per capita in most of the regions. The paradox of world and regional GDP per capita patterns can further undermine the political acceptability of the mitigation policy combined with a more open global labour market despite the higher economic efficiency reached with this policy combination. This, in turn, highlights the need for additional redistributive measures within countries.