Environmental Tax Reform and the Labour Market: The Double Dividend in Different Labour Market Regimes

During the past decade the issue of a general welfare double dividend (an improvement in environmental quality combined with a positive welfare effect) triggered by a tax shift from labor to energy resources has been extensively debated. In this book, Kurt Kratena studies the employment effects of revenue neutral tax shifts from labor to energy, and measures the impact on theoretical and empirical models of the European labor market.

A common theoretical framework is devised to analyze the impact of environmental tax reform. Various `labor market regimes' (competitive labor markets, union wage bargaining and efficiency wages) are derived and taken as the starting point for different specifications of the labor market. The theoretical outcomes of tax shifts in these different labor market regimes are then analyzed and compared.

The results reveal that whereas an econometric-based multi-sectoral model yields significant double dividend effects, a general equilibrium model only finds employment double dividend effects. The book also highlights the potentially positive economic consequences of environmental tax reform such as a shift in demand from energy to non-energy goods.

This book provides a concise appraisal of the general double dividend question combined with an innovative analysis of the employment double dividend effect. It utilizes extensive empirical evidence and reveals the sensitivity of the various theoretical concepts surrounding the debate. This book will be of interest and relevance to academics in the fields of environmental economics, labor theory and fiscal studies.