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Do carbon taxes kill jobs? firm-level evidence from British Columbia

Azevedo, Deven, Wolf, Hendrik and Yamazaki, Akio (2022) Do carbon taxes kill jobs? firm-level evidence from British Columbia. Climate Change Economics. ISSN 2010-0078 (In Press)

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Abstract

This paper investigates the employment impacts of British Columbia’s revenue neutral carbon tax. Using the synthetic control method with firm-level data, we find considerable heterogeneity in employment responses to the policy. We show that firm size matters. In particular, the carbon tax had a negative impact on large emissionintensive firms, but simultaneous tax cuts and transfers increased the purchasing power of low income households, substantially benefiting small businesses in the service sector and food/clothing manufacturing. Furthermore, we find that aggregate employment was not adversely affected by the policy. Our results provide additional insight for the “job-shifting hypothesis” of revenue neutral carbon taxes.

Item Type: Article
Additional Information: © 2022 World Scientific Publishing.
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
G Geography. Anthropology. Recreation > GE Environmental Sciences
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J20 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q50 - General
Date Deposited: 16 Nov 2022 09:42
Last Modified: 16 Nov 2022 11:24
URI: http://eprints.lse.ac.uk/id/eprint/117346

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