Conference Agenda

Carbon taxation is one of the main policy instruments for reducing greenhouse gas emissions, yet there is still limited evidence on its effects on firms and workers. This paper studies the environmental and economic effects of carbon taxation, with a particular focus on heterogeneity in labor demand across worker groups. I exploit a reform that increased the effective carbon tax for a subset of Swedish manufacturing firms between 2011 and 2018, and combine administrative firm data with matched employer-employee records in a difference-in-differences design. The reform reduced emissions by about 30%, primarily through substitution away from fossil fuels toward biofuels and district heating. It also reduced revenue and employment, with the strongest negative effects concentrated among emission-intensive firms. The employment effects are driven mainly by older workers without a high school degree, although older highly educated workers are also negatively affected in the most exposed firms. Additional evidence suggests that firms adjusted labor demand primarily through lower hiring rather than higher separations. Scaled by the average increase in effective tax rates (measured in euro per ton CO2), the estimates imply semi-elasticities of -0.58% for emissions and -0.20% for employment among low-educated workers. These results suggest that carbon taxation can substantially reduce industrial emissions, but with concentrated labor-market costs.

This study employs a computable general equilibrium (CGE) model to quantitatively assess the effects of replacing Japan’s existing energy taxes with a carbon tax. The analysis is based on a static model incorporating 30 goods and 19 sectors, using benchmark data from Japan’s 2015 input-output table and the 3EID emissions database. By integrating detailed energy tax data, the input-output table is adjusted to construct a CGE model that reflects the current structure of energy taxation.

The simulation results show that replacing existing energy taxes with a carbon tax can increase both GDP and welfare, while simultaneously maintaining tax revenue levels and reducing CO₂ emissions. These findings suggest that a carbon tax is more desirable than the current energy tax regime from both economic and environmental perspectives.

In addition, simulation scenarios that introduce carbon tax exemptions for energy-intensive sectors—such as iron and steel or cement—show that such exemptions significantly ease the burden on the targeted sectors while having only a minor effect on overall economic efficiency. Finally, policies that replace only non-automobile-related energy taxes with a carbon tax yield considerably smaller gains in GDP and welfare compared to full replacement policies. Nevertheless, even under these more limited reforms, either positive economic effects or substantial reductions in CO₂ emissions are still observed.

Climate policies have heterogeneous labour market impacts across sectors and occupations that are at the origin of the so-called green populist backlash. However, beyond coal miners, there are no criteria to assess worker's vulnerability to ambitious climate policy. Using rich establishment-level data for France, we construct a time-varying measure of the carbon content of jobs for 411 occupations over the period 2003-2019. We show that carbon-intensive occupations are hard to decarbonize, declining but not in wages, geographically concentrated and also exposed to capital deepening and trade. Using a shift-share instrument, we estimate the extent to which the impact of fossil fuel price shocks, a proxy of stringent climate policy, and of the EU-ETS are mediated by the occupational carbon intensity for a large sample of manufacturing establishments in France. First, we find that the employment decline in carbon intensive occupations is accelerated by fossil fuel price shocks. Second, we do not observe a pass-through of energy prices on wages in carbon intensive occupation. Third, we show that reallocation effects prevail over displacement effects. Indeed, workers exiting carbon intensive jobs are not more likely to be not-employed, but to change firm and occupation. Similar reallocation effects away from high-carbon jobs are triggered by a milder climate policy, the EU-ETS.

I study how household electrification shapes the distributional welfare effects of a carbon tax, focusing on the role of revenue recycling instruments. I develop a DSGE model with a discrete household electrification decision subject to financing frictions that slow adoption among low-income households, and non-homothetic preferences for energy. Using green subsidies as a revenue-recycling instrument lowers the peak tax rate required to achieve a given climate target, as it increases the share of renewable sources in electricity production and shifts energy demand towards electricity rather than fossil fuels. The lower tax rate and lower electricity price attenuate distortions in economic growth. However, as richer households electrify earlier, recycling carbon tax revenues through green subsidies disproportionately benefits higher-income households, leading to unequal welfare effects. Lump-sum transfers provide better insurance to financially constrained households but come at the cost of larger GDP and labor income losses. As an extension, I show that front-loaded carbon taxes reach climate targets with lower peak tax rates, limiting wage and GDP losses, but can amplify short-run inequality when combined with subsidy recycling.