Can a carbon permit system reduce Spanish unemployment?

Taran Fæhn (), Antonio Gómez-Plana and Snorre Kverndokk
Additional contact information
Taran Fæhn: Research Department, Statistics Norway,, Postal: P.B. 8131 Dep, 0033 Oslo, Norway.

No 26/2004, Memorandum from Oslo University, Department of Economics

Abstract: This paper analyses whether recycling revenues from carbon emission permit auctions can reduce unemployment in the Spanish economy. Spain's deviation from EU's intermediate emission goals is more serious than for most other EU countries, and the unemployment is also well above the EU average. We use a CGE model that includes a matching model with two types of labour, and which allows for different pricing rules and returns-to-scale assumptions. We find that abatement reduces unemployment due to beneficial impacts of recycling the revenue from permit sales. Unemployment is more effectively abated when revenues are used to reduce labour taxes rather than indirect taxes. Contrary to other studies of Europe, we find that the best option is to reduce payroll taxes on skilled labour. This reform is the most successful both in increasing demand and in dampening the supply response to rising wages. All the recycling schemes also generate dividends in terms of welfare, but none offset the abatement costs entirely.

Keywords: Spanish unemployment; Tax reform; Emission Permit Auctions; Employment dividend; Matching functions; Increasing returns to scale; Computable general equilibrium models (search for similar items in EconPapers)
JEL-codes: D58 J68 Q38 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2005-12-15
New Economics Papers: this item is included in nep-cmp, nep-env, nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Energy Economics, 2009, pages 595-604.

Downloads: (external link)
http://www.sv.uio.no/econ/english/research/unpubli ... 004/Memo-26-2004.pdf (application/pdf)

Related works:
Journal Article: Can a carbon permit system reduce Spanish unemployment? (2009)
Working Paper: Can a carbon permit system reduce Spanish unemployment? (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2004_026

Access Statistics for this paper

More papers in Memorandum from Oslo University, Department of Economics Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Mari Strønstad Øverås ().