Optimal Differentiation of International Environmental Taxes in the Presence of National Labor Market Distortions
In: Environmental and Resource Economics, Vol. 15 (2000), No. 1, pp. 89 - 102
2000article/chapter in journal
Economics
Title:
Optimal Differentiation of International Environmental Taxes in the Presence of National Labor Market Distortions
Author:
Felder, StefanUDE
- LSF ID
- 49726
- Other
- connected with university
Year of publication:
2000
Abstract:
We explore the implication of the `doubledividend' debate for international environmentaltaxes. In our scenario, small open economies withdifferent labor market distortions follow a commonenvironmental policy and use national environmentaltax revenues to finance labor tax cuts. Since thedouble dividend hypothesis does not hold, a high labortax implies a low environmental tax relative to othercountries. The optimal differentiation ofinternational environmental taxes is proven to be afunction of the national labor tax rates and theuncompensated elasticities of labor supply.