Transcript Présentation PowerPoint - Centre International de Recherche

3rd Annual GGKP conference
Venice, 29 - 30 January 2015
Green jobs potential in a skill-constrained
economy
Analysis of different carbon tax recycling schemes
for South Africa
Jules Schers
Co-authors: Frédéric Ghersi, Franck Lecocq
Supported by Agence Française de Développement (AFD)
Content
 South Africa’s questions of green growth and fiscal reform
 The IMACLIM South Africa model
 Reference projection and carbon tax recycling scenarios
 First results
 Considerations for labour market modelling
 Conclusions
South Africa’s development challenges:
economic, social and environmental
 South Africa’s economy:





Middle income country: GDP per capita 108th worldwide (2013)
Low annual GDP growth (2010-14: ~2,5%)
Persistently high unemployment: around 25% last decade
High income inequality: Gini index 0.65 in 2011 (“top 10” worldwide)
Skills shortage: university grad. unemployment only 3.8% (2005 estimate)
 High CO2 emissions: 9 tCO2 per capita in 2010 (Germany 9,1)
 Copenhagen Pledges (COP15) to reduce GHG emissions relative to baseline:
• by 34% in 2020
• by 42% in 2025, then plateau and decline
• meaning an estimated 400 to 600 Mt CO2-eq by 2035
 CO2 tax (Ctax) proposal of 120 ZAR/tCO2, to start in 2016 ( ~10 USD/tCO2)
Research Questions
 What CO2 tax revenue recycling scheme achieves South Africa’s
economic, social and environmental goals?
 Can investment in education and skills release drivers of green
growth for the South African economy?
Tool developed for analysis:
IMACLIM-South Africa, a “hybrid” open economy CGE-model, with
exogenous drivers for growth, in a one-step projection (2005 to 2035)
IMACLIM-South Africa
Tool for analysis of transitions
 Hybrid means dual energy/economy accounting in which we:
 Hybridise National Accounts data with energy data (quant. & prices)
 Inform behavioural specifications (technology), e.g. the change in factor
intensity of electricity production, based on expert/engineering insights
 ideal for testing visions with experts and stakeholders
 10 Products/Sectors (5 energy) & nested-CES consumption, and production
functions (with capital - high-skilled labour complementarity)
 Secondary income distribution (firms, government, 5 household classes)
 Second-best features:
 Mark-up pricing
 Imperfect labour markets: 3 skill levels as separated sub-markets
Reference projection and scenarios
 No damage (function) for climate change
 Reference Projection 2035 (RP):
 Productivity increase: capital (+2%/yr) and labour (+1%/yr)
 Constant international prices, exogenous export trend (+1.5%/yr)
 Education projection: constant enrollment numbers per education type
 CO2 tax (Ctax) scenarios for 2035:
 Ctax: 100 ZAR(2005)/tCO2 (18 USD(2012)/tCO2)
 No border tax adjustment, no Ctax export rebates
 No foreign or international Ctax
 Recycling schemes:
1. Reduction of VAT/sales tax
2. Reduction of company and household income and revenue taxes
3. Lumpsum transfer to all households
4. Scheme 1 + partial recycling into investment in education/skills
Results for Refererence Projection and
3 scenarios for recycling Ctax 100 ZAR
45.0%
37.5%
300
38.8%
250
34.6%
31.9%
34.4%
32.5%
30.0%
200
22.5%
150
15.0%
100
7.5%
50
0.0%
Average broad
unemployment
GDP/capita index
(right axis)
CO2 emission
index (rigth axis)
0
Base Year 2005 (BY)
Reference
Projection 2035
(RP)
2035 Ct100 Re:
Sales tax
2035 Ct100 Re:
Revenue taxes
2035 Ct100 Re:
Lumpsum transfer
Table: Average unemployment (numbers in italics), and indices for GDP per capita and CO2 emissions (both: right axis), for Base Year 2005
(BY), Reference Projection (RP), and 3 scenarios with a CO2 tax of ZAR 100/tonne CO2 and different recycling schemes
Results for Refererence Projection and
3 scenarios for recycling Ctax 100 ZAR
45.0%
37.5%
300
38.8%
250
34.6%
31.9%
Unempl. skill 1
34.4%
32.5%
30.0%
200
22.5%
150
15.0%
100
7.5%
50
0.0%
Unempl. skill 2
Unempl. skill 3
Average broad
unemployment
GDP/capita index
(right axis)
CO2 emission
index (rigth axis)
0
Base Year 2005 (BY)
Reference
Projection 2035
(RP)
2035 Ct100 Re:
Sales tax
2035 Ct100 Re:
Revenue taxes
2035 Ct100 Re:
Lumpsum transfer
Table: Unemployment by skill level, avg. unemployment, and indices for GDP per capita and CO2 emissions (both: right axis), for Base Year
2005 (BY), Reference Projection (RP), and 3 scenarios with a CO2 tax of ZAR 100/tonne CO2 and different recycling schemes
Subtle dynamics of skill-segmentated labour in a CGE
1. Definition: What is labour by skill level?
 Is it the skilledness of the worker, and can be represented by e.g. the
level of education: Constant Qualifications Definition (cqd)
 Is skill a characteristic of a certain job type in production, regardless
of the supply: Constant Shares of labour population Definition (csd)
 Or a combination: Supply of high-skilled labour goes up with degree,
but requirements of skill level job types go up too: Upgraded
Qualifications Definition (uqd)
2. Drivers for change of skill-intensity of production:
 Changing productivity; Relative factor prices; Other drivers?
3. Consumption’s role in demand for skills:
 Are high-skill intensive goods in higher demand when people get
richer? Do they have a higher income-elasticity than other goods?
Subtle dynamics of skill-segmentated labour in a CGE
1. Definition: What is labour by skill level?
 Is it the skilledness of the worker, and can be represented by e.g.
the level of education: Constant Qualifications Definition (cqd)
 Is skill a characteristic of a certain job type in production, regardless
of the supply: Constant Shares of labour population Definition (csd)
 Or a combination: Supply of high-skilled labour goes up with degree,
but requirements of skill level job types go up too: Upgraded
Qualifications Definition (uqd)
2. Drivers for change of skill-intensity of production:
 Changing productivity; Relative factor prices; Other drivers?
3. Consumption’s role in demand for skills:
 Are high-skill intensive goods in higher demand when people get
richer? Do they have a higher income-elasticity than other goods?
Recycling of Ctax in sales tax
+ investment in education
45.0%
37.5%
300
38.8%
250
31.9%
32.5%
Unempl. skill 1
32.9%
30.0%
200
22.5%
150
15.0%
100
7.5%
50
0.0%
0
Base Year 2005 (BY)
RP (Constant
Qualifications, cqd)
2035
2035 Ct100 cqd Re:
Sales tax
Unempl. skill 2
Unempl. skill 3
Average broad
unemployment
Real GDP/cap
index (right axis)
CO2 index (rigth
axis)
2035 Ct100 cqd Re:
Sales tax w add edu inv
Education investment leads to a higher supply of skill 3 labour, leading to relatively
lower skill 3 labour costs.
Subtle dynamics of skill-segmentated labour in a CGE
1. Definition: What is labour by skill level?
 Is it the skilledness of the worker, and can be represented by e.g. the
level of education: Constant Qualifications Definition (cqd)
 Is skill a characteristic of a certain job type in production, regardless
of the supply: Constant Shares of labour population Definition (csd)
 Or a combination: Supply of high-skilled labour goes up with degree,
but requirements of skill level job types go up too: Upgraded
Qualifications Definition (uqd)
2. Drivers for change of skill-intensity of production:
 Changing productivity; Relative factor prices; Other drivers?
3. Consumption’s role in demand for skills:
 Are high-skill intensive goods in higher demand when people get
richer? Do they have a higher income-elasticity than other goods?
Recycling of Ctax in sales tax + investment in
education, under Constant Shares Definition (csd)
45.0%
37.5%
300
38.8%
250
31.9%
32.5%
Unempl. skill 1
32.9%
30.0%
200
22.5%
150
Unempl. skill 3
15.0%
100
Average broad
unemployment
7.5%
50
0.0%
0
Base Year 2005 (BY) RP (Constant Shares 2035 Ct100 csd Re:
Definition, csd) 2035
Sales tax
Unempl. skill 2
Real GDP/cap index
(right axis)
CO2 index (rigth
axis)
2035 Ct 100 csd Re:
Sales tax w add edu
inv
Investments in education increase productivity of the 3 skill segments and of capital.
The result is even more demand for high-skilled workers.
Conclusions
 Methodological considerations:
 Analysing whether macro-economic impacts of investment in
education or skills spur growth and are inclusive requires labour
market disaggregation
 The subtle dynamics of supply and demand of labour with skill
differentiation require a carefull investigation
 We consider constructing scenarios (with experts and stakeholders) a
way to overcome calibration issues in regard of the multiple
dimensions of labour market dynamics
 Preliminary policy implications:
 Under our CGE settings we find that with the right recycling scheme a
carbon tax in South Africa can achieve SA’s economic, social and
environmental goals. Most likely by reducing sales taxes
 We see potential for even better economic outcomes by investment in
education/skills, but the inclusiveness of this measure depends on
detailed labour market conditions and the design of the investment
Thank you for your attention!