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Fossil fuel subsidies, income inequality and poverty. Evidence from developing countries

Author

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  • Cécile Couharde

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Sara Mouhoud
Abstract
The past two decades have witnessed widespread attempts to reform fossil fuel subsidies in developing countries. If the reforms are likely to improve economic efficiency, the expected effects on income distribution and poverty are more controversial. This paper reviews the recent literature that examines the impacts of fossil fuel subsidies and their reform on income inequality and poverty. It identifies the different channels that have been explored in the literature and surveys the empirical evidence on the importance of these channels in practice. Drawing on diverse country experiences, it also discusses why fossil fuel subsidies are particularly challenging to reform and highlights several ways in which efforts to reform may be feasible and successful.

Suggested Citation

  • Cécile Couharde & Sara Mouhoud, 2018. "Fossil fuel subsidies, income inequality and poverty. Evidence from developing countries," Working Papers hal-04141691, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141691
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141691
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ozili, Peterson K, 2023. "Implications of fuel subsidy removal on the Nigerian economy," MPRA Paper 118798, University Library of Munich, Germany.
    2. Sakiru Adebola Solarin, 2022. "Modelling Two Dimensions of Poverty in Selected Developing Countries: The Impact of Fossil Fuel Subsidies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 160(1), pages 357-379, February.
    3. Ozgur, Onder & Aydin, Levent & Karagol, Erdal Tanas & Ozbugday, Fatih Cemil, 2021. "The fuel price pass-through in Turkey: The case study of motor fuel price subsidy system," Energy, Elsevier, vol. 226(C).
    4. Stern, Nicholas & Lankes, Hans Peter & Macquarie, Rob & Soubeyran, Éléonore, 2024. "The relationship between climate action and poverty reduction," LSE Research Online Documents on Economics 121231, London School of Economics and Political Science, LSE Library.
    5. Ejime Herbert Aniemeke, 2024. "The Microeconomic and Macroeconomic Implications of Fuel Subsidy Removal in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(4), pages 1777-1784, April.
    6. Harro Asselt, 2023. "The SDGs and fossil fuel subsidy reform," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 23(2), pages 191-197, June.
    7. Dr. AKINOLA Emmanuel Taiwo & Dr. AKINTUNDE Samuel Akinrinola & Dr. AKINTUNDE-ADEYI, Julianah Funmilayo & BADEMOSI Seyifunmi Damilola & ABDUSSALAAM Lolade Bashir, 2024. "Effects of Fuel Subsidy Removal on Small and Medium Enterprises Growth and Development in Nigeria: Case of Block Making Industries," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(6), pages 1245-1258, June.
    8. Auktor, Georgeta Vidican & Loewe, Markus, 2021. "Subsidy reforms in the Middle East and North Africa: Strategic options and their consequences for the social contract," IDOS Discussion Papers 12/2021, German Institute of Development and Sustainability (IDOS).
    9. Nils Droste & Benjamin Chatterton & Jakob Skovgaard, 2024. "A political economy theory of fossil fuel subsidy reforms in OECD countries," Nature Communications, Nature, vol. 15(1), pages 1-14, December.
    10. Sumarno, Theresia B. & Sihotang, Parulian & Prawiraatmadja, Widhyawan, 2022. "Exploring Indonesia's energy policy failures through the JUST framework," Energy Policy, Elsevier, vol. 164(C).

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    More about this item

    Keywords

    fossil fuel subsidies; developing countries; distributional impact; subsidy reform;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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