Unemployment effects of climate policy

Babiker, Mustafa; Eckaus, Richard S.

doi:10.1016/j.envsci.2007.05.002

Cited by 57 publications

(46 citation statements)

References 5 publications

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“…Our results are not fully comparable to those of Babiker and Eckaus (2007) because we consider different climate policies (Kyoto Protocol emissions caps throughout the 2010-2100 horizon in Babiker and Eckaus (2007) versus a 550 ppm stabilization target here) and different ways of representing labour market rigidities (shares of sector-specific labour and minimum nominal wages versus wage curves). Nevertheless, we note that both studies show that labour market imperfections induce larger macroeconomic costs of climate mitigation than perfect labour markets.…”

Section: Resultscontrasting

confidence: 50%

“…The magnitude of the impact is, however, different. Babiker and Eckaus (2007) find relatively small impacts: US GDP variations between the climate policy scenario and the reference scenario in 2100 equal 23.5% of the reference GDP without labour market imperfections and 25% with labour market imperfections. For Japan, the same indicator changes from 210% to 212% when labour market imperfections are taken into account, whereas it has almost no impact in Europe.…”

Section: Resultsmentioning

confidence: 99%

“…4 The attention devoted to this issue in the macroeconomic field, and the refinement of theories and representations of labour market rigidities proposed in the literature, stands out against the very poor representation of labour markets in most energy-economy -environment (E3) models. Notable exceptions are E3MG , SGM (Second Generation Model; Fawcett and Sands, 2005) and the version of EPPA mentioned in the introduction (Babiker and Eckaus, 2007). Technically, in E3MG, employment is output-driven and real wages are linked to the unemployment rate through an econometric equation.…”

Section: Existing Modelsmentioning

confidence: 99%

“…In SGM, labour supply stems from a leisure -labour trade-off while labour demand remains elastic, so that there is no involuntary unemployment. The most refined representation of labour markets is probably in the version of EPPA by Babiker and Eckaus (2007), which includes the inertia of inter-sector reallocation (e.g. a share of the labour force is sector-specific in the short run) and wage rigidities (e.g.…”

Section: Existing Modelsmentioning

confidence: 99%

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The costs of climate policies in a second-best world with labour market imperfections

et al. 2011

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This article explores the critical role of labour market imperfections in climate stabilization cost formation, using a dynamic recursive energy-economy model that represents a second-best world with market imperfections and short-run adjustment constraints along a long-term growth path. The degree of rigidity of the labour markets is a central parameter, and a systematic sensitivity analysis of the model results confirms this. When labour markets are represented as highly flexible, the model results are in the usual range of the existing literature; that is, less than 2% GDP losses in 2030 for a stabilization target at 550 ppm CO 2 equivalent. However, when labour market rigidities are accounted for, mitigation costs increase dramatically. Accompanying measures are identified, namely labour subsidies, which guarantee against the risk of large stabilization costs in the case of high rigidities of the labour markets. This complements the usual view that mitigation is a long-term matter that depends on technology, innovation, investment and behavioural change. The results support the view that mitigation is also a shorter-term issue and a matter of transition with regard to the labour market.Keywords: climate policy costs; labour market rigidities; second-best world; sensitivity analysis Le rôle déterminant des imperfections du marché du travail dans la formation des coûts de l'atténuation du changement climatique est exploré, avec un modèle de l'interface énergie-économie, récursif et dynamique, qui représente un monde de second rang avec des imperfections du marché du travail et des contraintes d'ajustement de court terme le long d'une trajectoire de croissance à long terme. Le degré de rigidité des marchés du travail est un paramètre central, ceci étant confirmé par une analyse de sensibilité systématique des résultats. Lorsque les marchés du travail sont représentés comme très flexibles, les résultats se situent dans la fourchette habituelle de la littérature existante (c'est-à-dire moins de 2% de pertes de PIB mondial en 2030 pour une cible de stabilisation à 550 ppm équivalent CO 2 ). Cependant, lorsque les rigidités du marché du travail sont prises en compte, le coût de l'atténuation augmente très significativement. Des mesures d'accompagnement, à savoir des subventions sur le travail, garantissent contre le risque de coûts de la stabilisation élevés dans le cas de fortes rigidités sur le marché du travail. Cette vision complète la conception habituelle selon laquelle l'atténuation est une question de long terme qui dépend de la technologie, de l'innovation, de l'investissement et des changements de comportements. L'article signale que l'atténuation est aussi un problème de plus court terme et une question de transition sur les marchés du travail.Mots clés : analyse de sensibilité; coût des politiques climatiques; monde de second rang; rigidités des marchés du travail

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Section: Resultscontrasting

confidence: 50%

Section: Resultsmentioning

confidence: 99%

Section: Existing Modelsmentioning

confidence: 99%

Section: Existing Modelsmentioning

confidence: 99%

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The costs of climate policies in a second-best world with labour market imperfections

et al. 2011

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“…in energy and labor markets. Babiker and Eckaus (2007) and Guivarch et al (2011) show that taking into account unemployment and friction in labor market adjustments can change in a significant way the assessment of mitigation costs. In developing countries in particular, existing economic distortions cannot be disregarded in the design of climate policies.…”

Section: Defining Shared Climate Policy Assumptionsmentioning

confidence: 99%

A new scenario framework for climate change research: the concept of shared climate policy assumptions

et al. 2014

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The new scenario framework facilitates the coupling of multiple socioeconomic reference pathways with climate model products using the representative concentration pathways. This will allow for improved assessment of climate impacts, adaptation and mitigation. Assumptions about climate policy play a major role in linking socioeconomic futures with forcing and climate outcomes. The paper presents the concept of shared climate policy assumptions as an important element of the new scenario framework. Shared climate policy assumptions capture key policy attributes such as the goals, instruments and obstacles of mitigation and adaptation measures, and introduce an important additional dimension to

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Labor Market Distortions and Welfare-Decreasing International Emissions Trading

Takeda

Arimura

Sugino

2019

Environ Resource Econ

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Using a multi-region, multi-sector computable general equilibrium model, this paper analyzes the effects of international emissions trading (IET) with a focus on labor market distortions. We construct four separate models with several different labor market specifications: (1) a model without labor market distortions; (2) a model with taxinteraction effects in the labor market; (3) a model with a minimum wage; and (4) a model in which a wage curve determines wages. We use these models to analyze how the effects of IET change according to model specification. The main results from the analysis are as follows. First, we found that IET generates gains for all participants in the model without labor market distortions. Second, even in the models with labor market distortions, importers of emissions permits are highly likely to benefit. Conversely, we show that the possibility of a welfare loss from IET is not as small for exporters of permits. In particular, in the minimum wage and wage curve models, we found that the exporters of emissions permits are likely to be disadvantaged. However, this also depends on the region in question. For example, China is likely to suffer under IET, whereas Russia is likely to benefit. Finally, if we implement policies to alleviate labor market distortion simultaneously with emissions regulation, all regions receive benefit from IET.

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Unemployment effects of climate policy

Cited by 57 publications

References 5 publications

The costs of climate policies in a second-best world with labour market imperfections

The costs of climate policies in a second-best world with labour market imperfections

A new scenario framework for climate change research: the concept of shared climate policy assumptions

Labor Market Distortions and Welfare-Decreasing International Emissions Trading

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