Abstract

The purpose of this paper is to present a new methodology for evaluating the distributional impacts of climate policy. This methodology builds directly on the framework introduced by Jorgenson, Slesnick, and Wilcoxen (1992), but generalizes it by including leisure time, as well as goods and services, in the measure of household welfare. We provide detailed results for 244 different types of households distinguished by demographic characteristics. In addition, we evaluate the overall impact of a cap-and-trade system, as represented in Energy Modeling Forum 22. While there is a wide range of outcomes for different demographic groups, the impact on economic welfare is regressive and generally negative but relatively small.