The Survey of Conditions for Establishment of the Double Dividend Hypothesis: An Overlapping Generations Approach.

This paper, we analyze the double-dividend issues by the design of overlapping generations approach. We characterize the necessary conditions for the obtaining a double dividend, i.e. an improvement of environmental and non-environmental welfare when the revenue of the pollution taxis recycled into a change of the labor tax rate. We show that first advantage of the double dividend theory depending on; i) The level of energy consumption among elderly and young generations is not high enough so that the implementation of the energy tax policy will increase the government's revenues so much and subsequently the reduction in the tax rate on labor wages cannot keep to be fixed government revenue level.ii)The income effects of increased income labor tax on the government revenue aregreater than the substitution effects. Also, the second advantage of the double dividend theory is pertained to; i)The multiple coefficient of the setup cumulative policy (simultaneously increased energy tax and decreased labor income tax) is greater than multiple coefficient of the increased energy tax on the interest rate. ii)The multiple coefficient of the implementation this cumulative policy is lower than the multiple coefficient of the indirect effect of energy tax on the wage level of young generation. JEL Classification:D60, D62, E62, H23, Q28 Keywords: Environmental tax, Double dividend, Overlapping Generation Model