Environmental Fiscal Reform and Unemployment

The European Union faces several interlinked challenges: how to protect the environment and foster sustainability; how to reduce unemployment and foster competitiveness in the context of growing globalization; and how to reduce regional disparities among and within member countries. The recent policy debate has revealed that such objectives are not a trade off, provided they are tackled in concert. In particular, win-win policy options are available to the EU, given an appropriate integration of regulation, macro-policy, social policy, fiscal policy and environmental policy. The evidence shows that an optimization of each single policy will not meet the needs of the EU. But an integrated approach would allow the implementation of a genuine sustainable development policy. This study discusses the most recent results available on the green tax reform and the double dividend hypothesis. The first part is devoted to theoretical analysis, and the second provides empirical results.