Does a carbon policy really burden low-income families?

April 20, 2017

Does a carbon policy really burden low-income families?

Will climate policy disproportionately hurt the poor? Many say yes, but let’s look at the issue more closely. The purpose here is not to decide what’s fair, because readers can decide for themselves. Rather, the purpose is to demonstrate different notions of fairness. For “vertical” distributional effects between those with high- and low-incomes, the conventional view is that carbon policy is regressive (burdens that are a higher proportion of income for those with low income than for those with high income). Yet, new research disputes this conventional view of “vertical” effects, while bringing new attention to potential problems with “horizontal” distributional effects – across families at the same level of income. [1] This policy brief introduces these new ideas and explains these new results.

 

[1] See Cronin et al (2017).


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Research Area: Economic Policy

Policy Initiative: Climate Policy

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