Opponents of policies to price carbon will likely continue to attack such approaches on the notion that they kill jobs—but careful economic analysis suggests that these arguments are seriously exaggerated.
Full-employment models are often used to predict the labor-market effects of environmental policy. Here, we compare these predictions to those from a new model that incorporates key labor market details, including unemployment and job search.
Environmental regulations are unlikely to significantly reduce jobs in the US economy, contrary to what some critics suggest. Instead, jobs will shift away from polluting industries toward cleaner ones. Policy design can smooth that transition.
The American Opportunity Carbon Fee Act would levy a fee on US greenhouse gas emissions, largely on carbon dioxide. Modeling results illustrate the magnitude of the energy-related emissions reductions—projected to be 36 percent below 2005 levels in 2025.
An economy-wide carbon tax is a feasible mechanism to achieve the US 2025 Paris Agreement emissions target. We examine the price level and associated costs of carbon taxes that achieve reductions of 28 percent below 2005 emissions by 2025.
An economy-wide federal carbon tax can significantly reduce US carbon dioxide emissions but will also impact the US economy. A modeling exercise examines these macroeconomic impacts and demonstrates the effects of the tax on consumer prices and welfare.
The American Opportunity Carbon Fee Act would levy a fee on US greenhouse gas emissions, largely on carbon dioxide. Modeling results illustrate the magnitude of the emissions reductions over a 15-year time frame (2016 to 2030).
A carbon tax is unlikely to reduce the number of jobs in the US economy, contrary to what some critics suggest. Instead, jobs will shift away from polluting industries toward cleaner ones, a transition that can be made smoother by sound policy design.
Policy simulations from the Goulder– Hafstead Energy-Environment-Economy (E3) computable general equilibrium model of the US economy show the economic impacts of a carbon tax under alternative methods of recycling the tax revenues.