Unemployment, Labor Mobility, and Climate Policy / Kenneth A. Castellanos, Garth Heutel.

By:

Castellanos, Kenneth A

Contributor(s):

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w25797.Publication details: Cambridge, Mass. National Bureau of Economic Research 2019.Description: 1 online resource: illustrations (black and white)Subject(s):

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: We develop a computable general equilibrium model of the United States economy to study the unemployment effects of climate policy and the importance of cross-industry labor mobility. We consider two alternate extreme assumptions about labor mobility: either perfect mobility, as is assumed in much previous work, or perfect immobility. The effect of a $35 per ton carbon tax on aggregate unemployment is small and similar across the two labor mobility assumptions (0.2-0.4 percentage points). The effect on unemployment in fossil fuel sectors is much larger under the immobility assumption - a 24 percentage-point increase in the coal sector - suggesting that models omitting labor mobility frictions may greatly under-predict sectoral unemployment effects. Returning carbon tax revenue through labor tax cuts can dampen or even reverse negative impacts on unemployment, while command-and-control policies yield less efficient outcomes.

Tags from this library: No tags from this library for this title. Log in to add tags.

Average rating: 0.0 (0 votes)

Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w25797 (Browse shelf(Opens below))	Not For Loan

Total holds: 0

Collection: Colección NBER Close shelf browser (Hides shelf browser)

Previous	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	No cover image available	Next
Previous	nber w25794 Do Distressed Banks Really Gamble for Resurrection? /	nber w25795 Rise of Bank Competition: Evidence from Banking Deregulation in China /	nber w25796 Can Successful Schools Replicate? Scaling Up Boston’s Charter School Sector /	nber w25797 Unemployment, Labor Mobility, and Climate Policy /	nber w25798 Reducing Crime Through Environmental Design: Evidence from a Randomized Experiment of Street Lighting in New York City /	nber w25799 Incentivizing Learning-By-Doing: The Role of Compensation Schemes /	nber w2580 Consumption and Investment /	Next

May 2019.

We develop a computable general equilibrium model of the United States economy to study the unemployment effects of climate policy and the importance of cross-industry labor mobility. We consider two alternate extreme assumptions about labor mobility: either perfect mobility, as is assumed in much previous work, or perfect immobility. The effect of a $35 per ton carbon tax on aggregate unemployment is small and similar across the two labor mobility assumptions (0.2-0.4 percentage points). The effect on unemployment in fossil fuel sectors is much larger under the immobility assumption - a 24 percentage-point increase in the coal sector - suggesting that models omitting labor mobility frictions may greatly under-predict sectoral unemployment effects. Returning carbon tax revenue through labor tax cuts can dampen or even reverse negative impacts on unemployment, while command-and-control policies yield less efficient outcomes.