Within-Country Inequality and the Shaping of a Just Global Climate Policy
Marie Young-Brun, Francis Dennig, Frank Errickson, Simon Feindt, Aurélie Méjean, Stéphane Zuber
Proceedings of the National Academy of Sciences of the United States of America (PNAS),
Vol. 122 (39),
2025
Abstract
Climate policy design must balance emissions mitigation with concerns for fairness, particularly as climate change disproportionately affects the poorest households within and across countries. Integrated Assessment Models used for global climate policy evaluation have so far typically not considered inequality effects within countries. To fill this gap, we develop a global Integrated Assessment Model representing national economies and subnational income, mitigation cost, and climate damage distribution and assess a range of climate policy schemes with varying levels of effort sharing across countries and households. The schemes are consistent with limiting temperature increases to 2 °C and account for the possibility to use carbon tax revenues to address distributional effects within and between countries. We find that carbon taxation with redistribution improves global welfare and reduces inequality, with the most substantial gains achieved under uniform taxation paired with global per capita transfers. A Loss and Damage mechanism offers significant welfare improvements in vulnerable countries while requiring only a modest share of global carbon revenues in the medium term. The poorest households within all countries may benefit from the transfer scheme, in particular when some redistribution is made at the country level. Our findings underscore the potential for climate policy to advance both environmental and social goals, provided revenue recycling mechanisms are effectively implemented. In particular, they demonstrate the feasibility of a welfare improving global climate policy involving limited international redistribution.
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Why Is the Roy-Borjas Model Unable to Predict International Migrant Selection on Education? Evidence from Urban and Rural Mexico
Stefan Leopold, Jens Ruhose, Simon Wiederhold
World Economy,
Vol. 48 (2),
2025
Abstract
The Roy-Borjas model predicts that international migrants are less educated than nonmigrants because the returns to education are generally higher in developing (migrant-sending) than in developed (migrant-receiving) countries. However, empirical evidence often shows the opposite. Using the case of Mexico-U.S. migration, we show that this inconsistency between predictions and empirical evidence can be resolved when the human capital of migrants is assessed using a two-dimensional measure of occupational skills rather than by educational attainment. Thus, focusing on a single skill dimension when investigating migrant selection can lead to misleading conclusions about the underlying economic incentives and behavioral models of migration.
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Research Articles
Research Articles Explore cutting-edge research based on CompNet’s micro-aggregated firm-level data and related analytical tools. These articles cover empirical and theoretical…
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Centre for Business and Productivity Dynamics
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IWH-DPE in a Nutshell
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Halle Institute for Economic Research
Labour Markets: Sharpened Focus With the new name, the Department places its research focus on labour economics at the centre. Core topics remain structural change, wages,…
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Research Clusters
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Overview
About the project Project Information: ProdTool – NPB 2.0: Micro-Data Analysis Tool 2.0 for comparative productivity studies at National Productivity Boards (Project acronym:…
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Overview
About the project Project Information: Microdata platform for productivity Participating Countries: Slovakia, Slovenia, France, Germany, Portugal, Latvia and Austria. Coordinated…
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