Macroeconomic Structural change likely increases inequality in India more than climate policy

As a result of the ROCHADE project, this Indian case study analyzes the interaction of structural change and climate policy. Based on a comprehensive model framework that combines an IA model with two CGE models and a household model, the study shows that carbon pricing tends to delay economic structural change by retarding the reallocation of economic activities from the agricultural sector to the manufacturing sector. Furthermore, the results emphasize that the increase in inequality due to structural change is substantially stronger than due to carbon pricing. Consequently, socially sensitive policies supporting the process of structural transformation appear to be more important for poor households than lowering climate policy ambitions.

Macroeconomic structural change likely increases inequality in India more than climate policy
Leimbach, M., M. Hübler, H. Mahlkow, L. Montrone, E. Bukin, G. Felbermayr, M. Kalkuhl, J. Koch, M. Marcolino, F. Pothen, J. C. Steckel (2024), Environmental Research Letters 19, 044070.