Optimal carbon tax income distribution and health welfare spillover effect based on health factors

Abstract

Based on the Over Lapping Generation Model, this paper concerns the impact of environmental pollution and residents' health status on economic activities, and analyzes the relationship between tax revenue distribution proportion, economic activities and residents' social welfare. Through modeling, health welfare is introduced into welfare function, and time allocation proportion is introduced into health function and consumption budget. It is proved that the level of economic output and social welfare level can simultaneously optimal. Given the tax rate, we explore the optimal allocation ratio of carbon tax revenue when the per capita output of the economic steady-state equilibrium is optimal and the social welfare of the residents is optimal. Moreover, the evolutionary relationship among spillover effect, transfer payment, carbon tax, etc. is revealed. The stability analysis of qualitative conclusion is carried out and corresponding policies are put forward. It is proved that the optimal point of health welfare spillover effect exists. Then, under the steady-state equilibrium, in this paper the optimal effect of health welfare spillover is obtained.