Distributional effects of subsidy removal and implementation of carbon taxes in Mexican households

This paper presents a microsimulation using data from the National Households Income and Expenditure Survey (NHIES) from 1994 to 2010 to determine the distributional effects of the price changes arising from energy and environmental policies and their impact on Mexican households. We reported simula...

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Bibliographic Details
Published in:Energy economics 2017-01, Vol.61, p.21-28
Main Authors: Rosas-Flores, Jorge Alberto, Bakhat, Mohcine, Rosas-Flores, Dionicio, Fernández Zayas, José Luis
Format: Article
Language:English
Subjects:
Carbon
Carbon dioxide
Changes
CO2 emissions
Energy
Energy development
Energy economics
Energy policy
Environmental assessment
Environmental changes
Environmental degradation
Environmental impact
Environmental policy
Environmental tax
Family income
Household taxation
Households
Impact analysis
Implementation
Income
Mexico
Prices
Residential energy
Studies
Subsidies
Taxation
Taxes
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Summary:This paper presents a microsimulation using data from the National Households Income and Expenditure Survey (NHIES) from 1994 to 2010 to determine the distributional effects of the price changes arising from energy and environmental policies and their impact on Mexican households. We reported simulations of several changes in energy prices as a result of partial or total energy subsidy removal, including carbon tax. In order to examine whether the subsidy mechanism and carbon tax tend to be progressive or regressive, we evaluated the households' burden in different income levels. These simulations respond to the need for an assessment of economic and environmental impacts of energy subsidies in Mexico. This is of great importance for Mexico because of effort that has been taken in the development of energy policies, and the rising interest of the Mexican government in mitigating carbon dioxide (CO2) emissions and their concomitant environmental damage. •The results indicate that subsidies in electricity are progressive (indeed less progressive for LPG).•Some regression evidence is shown in gasoline subsidies, that is, low-income households benefit less from the subsidies than do high-income households.•The analysis demonstrates that a hypothetical CO2 tax is regressive in LPG and progressive in the case of gasoline.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2016.10.021