Umeå Economic Studies, Department of Economics, Umeå University
No 571:
Modelling Consumer Demand and Household Labour Supply: Welfare Effects of Increasing Carbon Taxes
Runar Brännlund ()
and Jonas Nordström ()
Abstract: The main objective of this paper is to analyse consumer
response and welfare effects due to changes in energy or environmental
policy. To achieve this objective we formulate and estimate an econometric
model for non-durable consumer demand in Sweden that utilises micro- and
macro-data. In the demand model male and female labour supply is included
as conditioning goods. To account for possible changes in labour supply due
to increasing carbon taxes we estimate separate labour supply functions for
men and women. In the simulations we consider two revenue neutral scenarios
that both imply a doubling of the CO2 tax; one that returns the revenues in
the form of a lower VAT and one that subsidise public transport. One
conclusion from the simulations is that the CO2 tax has regional
distribution effects, in the sense that household living in sparsely
populated areas carry a larger share of the tax burden.
Keywords: Consumer economics; demand analysis; energy taxation; labour supply; (follow links to similar papers)
JEL-Codes: C30; D12; Q41; (follow links to similar papers)
27 pages, November 1, 2001
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