Combating climate change through the welfare state: can social insurance boost support for carbon taxes in Europe?

Abstract

Carbon taxes are an effective tool to reduce carbon emissions but their use is hampered by a lack of public support. We develop the theoretical argument that social insurance programmes may be designed to mitigate perceptions of economic risk and unfairness, and thereby increase public acceptance of carbon taxes. Employing a novel combination of cross-sectional data, we test whether and how the coverage, replacement rates, and duration of three social insurance programmes relate to support for carbon taxes in 20 European countries. The results reveal that coverage correlates significantly with support for carbon taxes, while replacement rates and the duration of social insurance exhibit no such association individually. However, a combination of broad coverage and high replacement rates is linked to greater support for carbon taxes than broad coverage alone. The relationship between social protection and carbon tax support is furthermore equally strong among economically vulnerable and other groups.