IJSSH 2015 Vol.5(6): 514-519 ISSN: 2010-3646
DOI: 10.7763/IJSSH.2015.V5.510

The Environmental and Employment Effect of Australian Carbon Tax

Xianming Meng, Mahinda Siriwardana, and Judith McNeill
Abstract—The paper employs a computable general equilibrium (CGE) model with an environmentally-extended Social Accounting Matrix (SAM) to simulate the effects of a carbon tax of $23 per tonne of carbon dioxide on different economic agents, with and without a compensation policy. According to the simulation results, the carbon tax can cut emissions effectively, but will cause a mild economic contraction. The proposed compensation plan has little impact on emission cuts while significantly mitigating the negative effect of a carbon tax on the economy. The effect on various employment occupations is mildly negative, ranging from -0.6% to -1.7%, with production and transport workers worst affected.

Index Terms—Carbon tax, CGE modelling, macro economy, environmental effect, employment effect.

Xianming Meng and Mahinda Siriwardana are with the UNE Business School, University of New England, Armidale, NSW 2351, Australia (e-mail: xmeng4@une.edu.au).
Judith McNeill is with the Institute for Rural Futures, School of Behavioural, Cognitive and Social Sciences, University of New England.

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Cite: Xianming Meng, Mahinda Siriwardana, and Judith McNeill, " The Environmental and Employment Effect of Australian Carbon Tax," International Journal of Social Science and Humanity vol. 5, no. 6, pp. 514-519, 2015.

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