Coupling environmental transition and social prosperity: a scenario-analysis of the Italian case

This paper investigates to what extent green growth is able to promote social equity and which social policies can complement environmental policies to achieve social prosperity and sustainability. We develop a dynamic macrosimulation model to explore the social and structural effects of the Italian national energy and climate plan. We show that green growth alone will not result in better societal conditions and needs to be compensated with social policies that directly tackle inequality. Consequently, we select two social policies that are expected to improve income distribution, namely a basic income programme and working time reduction. Our scenario analysis shows that working time reduction leads to an increase in employment and a parallel decrease in aggregate demand that causes a reduction in emissions and inequality. The basic income programme reduces inequality by sustaining aggregate demand which, in turn, partially offsets the positive environmental effects of the energy plan.