Carbon Pricing and Inequality: A Normative Perspective

Thu, 01 Jan 2026 00:00:00 +0000

This paper quantifies the sources and distributional consequences of unexpected carbon price changes for European households using a money-metric welfare framework. The motivation is stark: while carbon taxes enjoy broad support among economists, they face persistent public opposition — exemplified by Australia’s 2014 repeal, France’s 2018 Yellow Vest protests, and the 2025 rollback of Canada’s consumer carbon tax. The authors ask whether average welfare losses are unusually large, and whether the burden falls disproportionately on vulnerable groups, both questions with direct implications for understanding and reducing political resistance.

Saki Bigio | Macro Paper Warehouse

Carbon Pricing and Inequality: A Normative Perspective