The double dividend and environmental tax reforms in europe 3 2009 and shows that when carbon tax revenue is used to reduce distortionary labour taxes employment increases in all sectors o improving equity through targeted initiatives with respect to the environment introducing personal energy allowances within the tax. Of this hypothesis states that tax revenues from a revenue neutral green tax reform can be used to cut distorting taxes thus lowering the efficiency cost of the green tax reform the strong form of the double dividend asserts that a green tax reform does not only improve the environment but also increases non environmental welfare. Employment double dividend with a segmented labour marketgiven the baseline scenario just briefly described simulation experiments designed to assess the effects of an environmental tax reform were performed this reform is designed to achieve the so called employment double dividend. Labour taxes moreover such an environmental tax reform can induce a double dividend however the results strongly depend on the labour supply elasticity as well as elasticities of substitution between labour and the capital energy aggregate for instance a higher labour supply elasticity implies a lower increase in labour costs. Downloadable the working of the labour market is important for the total welfare effects of tax reforms this paper analyses by using a computable general equilibrium model for the norwegian economy how different assumptions about labour mobility between industries and wage formation influence the non environmental welfare effects of an environmental tax reform
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