Abstract

This project aims to investigate the effects of carbon taxation on labor demand for different types of workers in Sweden. Using matched employer-employee data from the Swedish registers for the years 2004-2018, I estimate the effects of a reform that removed the carbon tax rebates for a subset of firms in the manufacturing and mining sectors. Using a difference-in-difference framework, I find that the reform significantly reduced emissions among treated firms; it also reduced the employment of workers without a high school degree. This effect is mainly driven by a reduction in the hiring rate of this group. The annual income of workers staying with the same firm over the time period does not seem to be affected by the reform. The results show that carbon taxation has heterogeneous impacts, and that complementary policies might be needed to address labor market inequalities.