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  Macroeconomic structural change likely increases inequality in India more than climate policy

Leimbach, M., Huebler, M., Mahlkow, H., Montrone, L., Bukin, E., Felbermayr, G., Kalkuhl, M., Koch, J., Marcolino, M. A., Pothen, F., Steckel, J. C. (2024): Macroeconomic structural change likely increases inequality in India more than climate policy. - Environmental Research Letters, 19, 4, 044070.
https://doi.org/10.1088/1748-9326/ad34e9

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Item Permalink: https://publications.pik-potsdam.de/pubman/item/item_29713 Version Permalink: https://publications.pik-potsdam.de/pubman/item/item_29713_4
Genre: Journal Article

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 Creators:
Leimbach, Marian1, Author              
Huebler, Michael2, Author
Mahlkow, Hendrik2, Author
Montrone, Lorenzo2, Author
Bukin, Eduard2, Author
Felbermayr, Gabriel2, Author
Kalkuhl, Matthias2, Author
Koch, Johannes1, Author              
Marcolino, Marcos Araujo1, Author              
Pothen, Frank2, Author
Steckel, Jan Christoph2, Author
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1Potsdam Institute for Climate Impact Research, ou_persistent13              
2External Organizations, ou_persistent22              

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 Abstract: The decarbonization of India's economy will have different effects across income groups. As India is in the middle of the transformation process from an agriculture-based economy towards an industry- and service-based economy, called economic structural change, the extent of income distribution across households strongly depends also on the speed of economic transformation. While a number of recent studies have analyzed the distributional effects of carbon pricing, the specific role of structural change across sectors has not been in the focus of the related literature. Our study contrasts distributional effects from climate policy with distributional effects from structural change in India and asks how far carbon pricing supports or hinders structural change and development. We develop and apply a comprehensive model framework that combines economic growth and international trade dynamics related to structural change with detailed household income and expenditure data for India. Our study shows that changes in income and inequality due to carbon pricing vary with the changes in the sectoral structure of economies. Our results indicate that carbon pricing tends to delay economic structural change by retarding the reallocation of economic activities from the agricultural sector to the manufacturing sector. Furthermore, the results emphasize that the increase in inequality due to structural change is substantially stronger than due to carbon pricing. Consequently, socially sensitive policies supporting the process of structural transformation appear to be more important for poor households than lowering climate policy ambitions.

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Language(s): eng - English
 Dates: 2024-03-182024-03-182024-04-09
 Publication Status: Finally published
 Pages: 26
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1088/1748-9326/ad34e9
Organisational keyword: RD3 - Transformation Pathways
PIKDOMAIN: RD3 - Transformation Pathways
Working Group: Macroeconomic modeling of climate change mitigation and impacts
MDB-ID: No MDB - stored outside PIK (see DOI)
Model / method: REMIND
Regional keyword: Asia
Research topic keyword: Carbon Pricing
Research topic keyword: Climate Policy
Research topic keyword: Economics
Research topic keyword: Inequality and Equity
OATYPE: Gold Open Access
PIKDOMAIN: RD5 - Climate Economics and Policy - MCC Berlin
Organisational keyword: RD5 - Climate Economics and Policy - MCC Berlin
Working Group: Welfare and Policy Design
 Degree: -

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Project name : ROCHADE
Grant ID : 01LA1828A
Funding program : -
Funding organization : Bundesministerium für Bildung und Forschung (BMBF)
Project name : ELEVATE
Grant ID : 101056873
Funding program : Horizon Europe (HE)
Funding organization : European Commission (EC)
Project name : Gefördert im Rahmen des Förderprogramms "Open Access Publikationskosten" durch die Deutsche Forschungsgemeinschaft (DFG) - Projektnummer 491075472.
Grant ID : -
Funding program : Open-Access-Publikationskosten (491075472)
Funding organization : Deutsche Forschungsgemeinschaft (DFG)

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Title: Environmental Research Letters
Source Genre: Journal, SCI, Scopus, p3, oa
 Creator(s):
Affiliations:
Publ. Info: -
Pages: - Volume / Issue: 19 (4) Sequence Number: 044070 Start / End Page: - Identifier: CoNE: https://publications.pik-potsdam.de/cone/journals/resource/150326
Publisher: IOP Publishing