"Labor Reallocation, Green Subsidies, and Unemployment" Job Market Paper
[Paper]
Green subsidies are a common decarbonization tool, yet their labor market implications are not well understood. This paper examines the labor market and welfare impacts of green subsidies by combining a labor search model with evidence from U.S. microdata on worker transitions between green, fossil, and all remaining “neutral” jobs. A key insight from the microdata is that workers in fossil jobs rarely transition to green jobs and more often start neutral jobs. The results show that the impacts of green subsidies depend on the financing mechanism. While subsidies financed by payroll taxes reduce employment and welfare, subsidies financed in a non-distortionary manner increase employment. The employment gains translate into higher welfare relative to carbon pricing for low abatement levels. This suggests that appropriately funded green subsidies can serve as a cost-effective alternative to carbon pricing when emissions reductions are small.
"Between- and within-country distributional impacts from harmonizing carbon prices in the EU", with F. Landis and S. Rausch, Energy Economics, 103, 2021.
"Assessing the Distributional Effects of the European Green Deal", with G. Zachmann, CESifo Forum, 22, 2021.
"Estimating the cost of capital for wind energy investments in Turkey", with S. Tagliapietra and G. Zachmann, Energy Policy, 131, 2019.
"The EU response to US trade tariffs", with M. Demertzis, Intereconomics – Review of European Economic Policy, 53, 2018.
"The distributional effects of climate policies", with G. Zachmann, in: The European Energy Transition: Actors, Factors, Sectors, S. Nies. (Ed.), Deventer: Claeys & Casteels Law Publishing, 75-91, 2019.
"Distributional and Efficiency Impacts of Supranational Carbon Budget Allocations", with F. Landis and S. Rausch
This paper examines the efficiency and distributional effects, across and within countries, of various carbon budget allocations that are consistent with a 55 percent emissions reduction target in the EU by 2030. Using a multi-region, multi-commodity general equilibrium model, we evaluate the allocations with and without emissions trading in the Effort Sharing Regulation (ESR) partition to also consider the implications of creating a second emissions trading system (ETS) in the EU. We find that efficiency improves if the ESR partition is assigned a higher carbon budget share compared to the Fit for 55 package. Supporting lower-income member states by giving them more ESR allowances relative to the Fit for 55 package also increases efficiency, although only if ESR allowances are not traded. Within countries, we typically find evidence of progressive outcomes, independent of the carbon budget allocation or whether a second ETS is introduced.
"Unemployment and Welfare from Climate Policy", with J. Abrell and S. Rausch
This paper examines the impact of unemployment on the welfare from climate policy. We compare welfare with and without unemployment to discern the portion of policy costs stemming from unemployment. The analysis is carried out using two prevalent modeling paradigms for climate policy evaluation: a multi-region, multi-sector numerical general equilibrium GE model that ignores damages from climate change (thus focusing on cost-effectiveness) and a DICE representation that corresponds to a decentralized market (equilibrium) economy. The results suggests that it is important to account for unemployment when assessing the costs of and benefits from climate policy. The extent to which welfare changes from relaxing the full employment assumption depends on the role of labor in production and abatement, and on the responsiveness of unemployment to real wage changes.
"In the Heat of the Moment: Carbon Pricing Support in a National Referendum", with L. Barrage
What drives voter preferences about carbon pricing policies? This paper presents an empirical analysis of the determinants of voter decisions on carbon pricing in a national referendum (Switzerland’s CO2 Act vote of 2021). On the one hand, the results indicate that opposition to carbon pricing is increasing in local determinants of its potential costs, such as high unemployment rates, car ownership rates and electricity prices, consistent with the importance of (perceived) economic self-interest. On the other hand, the results also suggest that voters exposed to unusually warm weather during the voting period were significantly more likely to support the carbon pricing law. This effect is only apparent for temperature deviations relative to a recent temperature baseline, consistent with declining remarkability of temperature anomalies. Finally, we find mixed evidence on the impacts of long-run temperature change on carbon pricing support.
"Let’s pay more attention to the co-benefits of Switzerland’s decarbonization targets”, with M. Filippini, F. Landis, and J. Savelsberg, Energy Blog at ETH Zurich, 2021.
"The distributional effects of climate policies", with G. Zachmann and G. Claeys, Bruegel Blueprint Series, 2018.
"Still on the road? Assessing Trump’s threat to European cars", with A. Roth and S. Tagliapietra, Bruegel Blog Post, 2018.
"Is the European automotive industry ready for the global electric vehicle revolution?", with A. Roth, S. Tagliapietra, and R. Veugelers, Bruegel Policy Contribution, 2018.
"The Impact of Brexit on the EU Energy System", with A. Roth, S. Tagliapietra, and G. Zachmann, European Parliament, 2017.