In this working paper we study the empirical viability of a double dividend (green, welfare, and employment) in the Spanish economy using a Computable General Equilibrium model. The model is of the walrasian static multisectorial kind, and it is calibrated by using a 1995 Social Accounting Matrix of the Spanish economy compiled using data from the NIPA and other sources. A relevant trait of the model is that in equilibrium all markets clear with the possible exception of the labor market.

We consider a counterfactual scenario in which an ecotax is leviedon the intermediate and final use of energy goods. Under a revenue neutral assumption, we evaluate the impact of recycling ecotaxes towards lower labor taxes. We find that a double dividend can be achieved, under such policy, for the economy. That is, a better environmental quality, as measured by a reduction in CO2 emissions, an improved level for employment, and a gain in private welfare. To appraise to what extent the model structure and behavioral assumptions may influence the results, we perform simulations under a broad range of policy and model scenarios. Particularly, we contemplate different assumptionson consumers’ labor supply and on substitution between the two production factors, labor and capital services.