GTAP Resources: Resource Display
| GTAP Resource #7868 |
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"Efficiency and distributional impacts of EU carbon and labor market integration" Authors: Temursho, Umed, Florian Landis, Jan Abrell, Sebastian Rausch and Matthias Weitzel Abstract This paper examines the efficiency and distributional impacts of harmonizing carbon permit prices across the EU, the UK, Norway, and Switzerland (EU+) under alternative assumptions about labor market structure. We employ the ELBE-JRC model, a multi-region, multi-sector computable general equilibrium model with a fully integrated household microsimulation module covering 30 countries. The model is applied to 18 illustrative scenarios that incorporate three CO2 cooperation regimes (EU ETS with national pricing, with non-ETS trading, and full ETS), three labor mobility scopes (national, sectoral, EU-wide) and two labor market assumptions (full employment versus allowing for unemployment). Our main findings are as follows. First, harmonizing carbon prices yields large efficiency gains, cutting aggregate welfare losses by up to 80% relative to fragmented carbon markets, driven primarily through the uses-side channel. Second, allowing for involuntary unemployment amplifies welfare losses by a factor of 3 to 10, due to higher consumer prices depressing real wages that trigger the wage-curve mechanism. Third, broader labor market integration generally worsens aggregate welfare, particularly under fragmented carbon markets, because cross-sectoral and cross-border reallocation raises consumption prices more than it increases nominal incomes. [TBC] |
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- Climate change policy - Environmental policies - Renewable energy - Sustainable development - GTAP Data Base and extensions - Labor market issues - Partial and general equilibrium models - Europe (Northern) - Europe (Western) - European Union |
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Public Access  Paper (712.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/15/2026 11:27:11 AM
