American Economic Journal: Macroeconomics
no. 3, July 2023
We estimate the macroeconomic impacts of carbon taxes on GDP and employment growth rates using 30 years of data on carbon taxation in various European countries. We find no evidence for a negative impact on employment or GDP growth but rather find a zero to modest positive impact. We also find a cumulative emissions reduction on the order of 4 to 6 percent for a $40/ton CO2 tax covering 30 percent of emissions. Reductions would likely be greater for a broad-based US carbon tax since European carbon taxes typically do not cover those sectors with the lowest marginal abatement costs.
Metcalf, Gilbert E., and James H. Stock.
"The Macroeconomic Impact of Europe's Carbon Taxes."
American Economic Journal: Macroeconomics,
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Climate; Natural Disasters and Their Management; Global Warming
Environmental Economics: Government Policy