Diego Kaenzig, PhD, Northwestern University

Title: The Unequal Economic Consequences of Carbon Pricing

Abstract: This paper studies the economic impacts of carbon pricing. Exploiting institutional features of the European carbon market and high-frequency data, I document that a tighter carbon pricing regime leads to higher energy prices, lower emissions and more green innovation. This comes at the cost of a fall in economic activity, which is borne unequally across society: poorer households lower their consumption significantly while richer households are less affected. The poor are more exposed because of their higher energy share and, importantly, also experience a larger fall in income. Targeted fiscal policy can help alleviate these costs while maintaining emission reductions.

Paper: https://dkaenzig.github.io/diegokaenzig.com/Papers/kaenzig_jmp_unequal_consequences_carbon_pricing.pdf