PhD defence: Jimmy Karlsson "The Economic Impacts of Carbon Taxation and Climate Change"

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Opponent
Professor Peter Nilsson, Institutet för internationell ekonomi, Stockholms universitet

Grading committee
Docent Tobias König, Institutionen för nationalekonomi och statistik, Linnéuniversitetet
Docent Daniel Spiro, Nationalekonomiska institutionen, Uppsala universitet
Professor Andreea Mitrut, Institutionen för nationalekonomi med statistik, Handelshögskolan vid Göteborgs universitet

Chair
Professor Mikael Lindahl, Institutionen för nationalekonomi med statistik, Handelshögskolan vid Göteborgs universitet

Abstract
Carbon Taxation, Firm Performance, and Labor Demand

This paper investigates the environmental and economic effects of carbon taxation, including the impacts on labor demand for different workers. Using matched employer-employee data from the Swedish registers from 2004 to 2018, I estimate the effects of a reform that increased the stringency of the tax for a subset of firms in the manufacturing sector. In a Difference-in-Differences framework, I find that the reform significantly reduced emissions, primarily through a switch to biofuels. However, it also reduced revenue and employment among emission-intensive firms. The negative employment effects are more pronounced for low-educated workers, suggesting a skill-biased effect of carbon taxation, although high-educated workers are also negatively affected at the most exposed firms. On average, the result corresponds to semi-elasticities of -0.58% per euro tax increase for emissions, and -0.20% for low-educated employment. The paper concludes with a discussion on the implications for the green transition and labor market inequality.

Keywords: Carbon taxation, Climate change, Firm performance, Inequality, Employment

JEL Codes: H23, J23, L60, Q52, Q58

Carbon Taxation and Local Labor Markets

This project studies the effects of a carbon tax reform on local labor markets in Sweden. I exploit spatial variation in exposure to the reform which removed manufacturing rebates to the carbon tax from 2011 to 2018, based on the geographical distribution of affected firms. Using matched employer-employee population data, I develop a Difference-in-Differences framework which indirectly controls for confounders using the Generalized Propensity Score for continuous treatments. I find no significant effects on local employment rates or labor force participation. The heterogeneity analysis reveals similar zero-to-moderate employment effects regardless of education levels. The result indicates low distributional costs of a higher carbon tax after allowing for local spillovers.

Keywords: Carbon taxation, Inequality, Employment, Local labor markets

JEL Codes: J21, J23, J60, Q52, Q58, R23

Temperature and Exports: Evidence from the United States

This paper estimates the effect of exogenous short-term temperature changes on the economy of the United States, using high-resolution data on monthly exports which has not been previously exploited in the literature. The detailed disaggregation of U.S. export data into sectors enables a top-down estimation of the net effect of temperature, while also identifying potential mechanisms at the micro level. Using an econometric specification which allows high parametric flexibility, I find significantly negative effects of both high and low temperatures. The magnitude of the effects corresponds to an average reduction of annual U.S. exports by 0.20%, following a uniform 2°C temperature increase. Industry heterogeneity in the temperature effect suggests disparate mechanisms behind hot and cold days, which are important to take into account when forecasting the future economic damages of climate change in the United States.

Keywords: Climate Change, Exports, Manufacturing, Temperature, United States

JEL Codes: F18, L60, Q54, Q56