The double dividend issue: modeling strategies and empirical findings

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. Abstract. This paper reviews recent developments in the study of the so-called "double dividend", i.e. the possibility of improving the environment and, at the same time, reducing the distortions of the tax system through revenue-neutral green taxes. Recent modeling advances are considered at both the theoretical and the empirical levels. In particular, we note that the most significant theoretical advances have been made in the direction of allowing for imperfectly competitive markets, especially the market for labor. At the same time, we argue that empirical work, particularly on the "employment double dividend", is still relatively scant and that much more needs to be done both in the direction of more realistic empirical models and of an extended sensitivity analysis of the main findings. Terms of use: Documents inOctober 1998. Keywords: Double Dividend, Environmental Fiscal Reform, Environmental Modeling. JEL Classification: H0, H2, H3.Paper presented at the Symposium on "Environment, Energy, Economy. A Sustainable Development", Toward the National Conference on Energy and Environment, Rome 12-13 October, 1998. 1 THE DOUBLE DIVIDEND ISSUE: MODELING STRATEGIES AND EMPIRICAL FINDINGS Non-Technical SummaryThis paper reviews recent developments in the study of the so-called "double dividend", i.e. the possibility of improving the environment and, at the same time, reducing the distortions of the tax system through revenue-neutral green taxes.Roughly speaking, the double dividend literature can be divided in two strands. A first group of contributions focuses upon the distortions of the tax system, before and after an environmental fiscal reform. The emphasis of this notion of double dividend, referred to as weak or strong double dividend, is typically on individual welfare, with less attention being paid to the specific modes in which the tax revenues are recycled and their consequences for the economy. A second crop of papers looks at the impact that recycled fiscal revenues can have on relevant macroeconomic variables, especially employment, output, or growth. The papers in this area are motivated by the persistently high levels of unemployment which have now afflicted Europe for a decade. This specific form of double dividend, where both emissions and unemployment are reduced by the fiscal reform, is usually named "employment double dividend". This paper aims at providing an updated review of the advances in the study of the double dividend issue. In ...

Double dividend hypothesis, golden rule and welfare distribution

“…These intergenerational issues on environmental externalities 1 or on taxation 2 have been quite widely studied in the economic literature. In an overlapping generations framework, John et al [21] examine the e¤ect of an environmental tax whose revenue …nances a public pollution abatement activity.…”

“…The potential contradiction between e¢ ciency and distributional concern has been already emphasized by some works in other frameworks. While the double dividend hypothesis is rejected when the economy consists of one productive sector, using only one productive factor (labor), and one representative consumer (Bosello, Carraro and Galeotti [2]), when instead there are several productive factors and/or several consumer groups, the double dividend can be obtained but at the expense of distributive equity (Bovenberg and van der Ploeg [10], Proost and van Regemorter [30]). …”

The double-dividend hypothesis of environmental taxes: a survey

“…The first extension focuses on an apparently technical point that, however, turns out to 1 The distinction between the weak and the strong form of the double dividend hypothesis is due to Goulder (1995) who surveys the early literature. Recent surveys on the double dividend hypothesis are Bovenberg (1995Bovenberg ( , 1998Bovenberg ( , 1999, Schöb (1995), Bosello, Carraro and Galeotti (2001) and Kirchgässner (1998).…”

Fighting CO2 Pollution and Poverty While Promoting Growth: Searching for Triple Dividends in South Africa

“…One way to achieve such an integrated policy is to search for double or triple dividends through environmental taxes. Although a study searching for such dividends would by no means be new to the literature (Bosello et al 2001, Bossier and Brechet 1995, Bovenberg 1999, Fullerton and Metcalf 1997, Jorgenson and Wilcoxen 1993, it is South Africa's concern with poverty alleviation, carbon reduction and at the same time ensuring continued economic growth, that distinguishes this study from related work.…”