Essays in Climate and Labour Economics

University dissertation from Stockholm : Department of Economics, Stockholm University

Abstract: This thesis consists of four essays in climate and labour economics.Uncertainty, Climate Change and the Global EconomyUsing a modified version of the RICE model of the global economy and climate, we explore the uncertainty about various natural and socio-economic processes, and how this feeds through to uncertainty about climatic and economic outcomes. Under a Business-As-Usual scenario, the median increase of global mean temperature in 2105 will be around 5.0 °C. The 99-percent confidence interval ranges from 3.4 to 7.3 °C. Uncertainty about socio-economic drivers lie behind a non-trivial part of this uncertainty about global warming.Temperature Feedbacks to the Carbon Cycle in Climate–Economy ModelsThere is great uncertainty about how much of future CO2 emissions will be absorbed by the biosphere, due in part to uncertainty about climate sensitivity. Several well-known climate-economy models do not take this effect into account. We extend the carbon cycle component of the DICE model such that carbon flows between atmosphere and biosphere are made temperature dependent. Our results suggest that the baseline DICE model understates atmospheric CO2, particularly after fossil fuels have been phased out.Optimal Carbon Taxes With Social and Private DiscountingAn analytically tractable climate-economy model is extended to allow for a social planner that discounts the future differently than private agents. If a planner discounts the future at a different rate than private agents, the laissez-faire and the socially optimal rate of fossil-fuel depletion differ substantially. This calls for optimal carbon taxes that fall over time, eventually turning into subsidies. Welfare losses in the event that the first-best can not be implemented are substantially larger with differences in discount rates.Last In, First Out? Estimating the Effect of Seniority Rules in SwedenThe ‘last-in-first-out’ principle in Sweden was reformed in January 2001 such that employers with ten or fewer employees were allowed to exempt two workers from the seniority rule. We find that both hires and separations increased in small firms relative to large firms by 5 percent. This also implies that there were no effects on firms’ net employment. Our results show that firms reacted to changes in the seniority rules, but the effects are not overwhelmingly large.

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