The Carbon Tax, Ageing and Pension Deficits
Gonand, Frédéric (2016), The Carbon Tax, Ageing and Pension Deficits, Environmental Modeling and Assessment, 21, 3, p. 307-322
TypeArticle accepté pour publication ou publié
Journal nameEnvironmental Modeling and Assessment
Kluwer Academic Publishers
MetadataShow full item record
Laboratoire d'Economie de Dauphine [LEDa]
Abstract (EN)Ageing increases the income of a carbon tax ceteris paribus since energy consumption rises with age, as macro and micro data show. Ageing also increases some public expenditures, notably those of pay-as-you-go (PAYG) pension systems. Accordingly, there may be a case for recycling a carbon tax in an ageing context so as to finance ageing-related public expenditures. This article studies the interacting effects on intergenerational equity and growth of such a recycling. It relies on a general equilibrium model with overlapping generations parameterised with empirical data. Several results emerge. Implementing a carbon tax fully recycled through higher lump-sum pensions weighs relatively more on the intertemporal welfare of young and future generations. A carbon tax fully recycled through lower social contributions financing the PAYG bolsters the wellbeing of young and future generations but weighs on the welfare of baby-boomers and older cohorts. The redistributive effects of recycling a carbon tax can depend significantly on the way used to balance the PAYG regime.
Subjects / KeywordsCarbon tax; Intergenerational redistribution; Overlapping generations; PAYG pension reform; General equilibrium
Showing items related by title and author.
Antolín, Pablo; de la Maisonneuve, Christine; Gonand, Frédéric; Oliveira Martins, Joaquim; Yoo, Kwang-Yeol (2005) Document de travail / Working paper