A CGE-Analysis of Energy Policies Considering Labor Market Imperfections and Technology Specifications

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in A CGE-Analysis of Energy Policies Considering Labor Market Imperfections and Technology Specifications SummaryThe paper establishes a CGE/MPSGE model for evaluating energy policy measures with emphasis on their employment impacts. It specifies a dual labor market with respect to qualification, two different mechanisms for skill specific unemployment, and a technology detailed description of electricity generation. Non clearing of the dual labor market is modeled via minimum wage constraints and via wage curves. The model is exemplarily applied for the analysis of capital subsidies on the application of technologies using renewable energy sources. Quantitative results highlight that subsidies on these technologies do not automatically lead to a significant reduction in emissions. Moreover, if emission reductions are achieved these might actually partly result from negative growth effects induced by the promotion of cost inefficient technologies. Inefficiencies in the energy system increase unemployment for both skilled and unskilled labor.

Climate change, innovation and jobs

“…Limited short-run flexibility of real wages can further contribute to fluctuations in output, employment and unemployment. Babiker and Eckhaus (2006) and Küster et al (2007) include sectoral rigidities in labour mobility and in wage adjustments as a factor in a computable general equilibrium model to evaluate the impact of climate policy measures on overall economic performance. According to Babiker and Eckhaus, Kyoto-like limitations on greenhouse gas emissions could lead to a 4% reduction of US GNP within the first 10 years after the start of the policy as a result of increased unemployment in negatively affected sectors.…”

“…They suggest labour market policies to counteract this effect. Furthermore, Küster et al (2007) show that unemployment rises as a result of negative growth effects when subsidies for renewable energy technologies are applied, while unskilled workers are more seriously affected than skilled ones. However, they assume a comparatively lower labour intensity for renewable energy technologies.…”

Regional economic impacts of biomass based energy service use: A comparison across crops and technologies for East Styria, Austria

“…Multiregional CGE models for the analysis of energy policy are not new, but to date have almost exclusively focussed either on a global scale, with ''regions'' implying world regions (e.g. Reilly and Paltsev, 2009;Jacoby et al, 2006; or taken the many models based on GTAP, such as Kuester et al, 2007) or -to a much smaller extent -on a national scale (particularly for the US) with ''regional'' implying a group of states (or provinces) within nations (e.g. for the US the impact analaysis for planning (IMPLAN) input-output framework has been linked repeatedly with a CGE approach for analysing the economic impacts of biomass energy for individual states or groups of states; Ross et al (2004) applies the applied dynamic analysis of the global economy (ADAGE) model for a split up of the US into five regions, aggregating the respective states).…”

Households’ Behaviour and Environmental Emissions in a Regional Economy

“…This wage curve corresponds to the empirical evidence for Spain on the inverse relationship between the level of real wages and the unemployment rate. For this purpose, we introduce the wage curve in the model, following Küster et al (2007), which requires including an additional equation in the model to substitute flexible wages by a wage equation, in which the wage rate is linked to the level of unemployment (see equations B1 and B2 in supplementary material).…”