A Comparative Study on Carbon Tax Resistance: Mitigating the Impact of Job Risk Beliefs through Information and Worker Compensation

The implementation of disruptive policies requires public support, but they are often politically contested. Carbon taxes are cost-effective climate policies, but remain broadly unpopular, particularly due to concerns about potential policy-induced job risks. The claim that carbon taxes destroy jobs, leveraged by the opposition, lacks strong empirical support. However, this narrative persists, resonating both with workers who genuinely fear job displacement and with individuals who adopt it as a seemingly rational justification for ideological opposition. We study how beliefs about job risk influence resistance to carbon taxation, investigating two strategies to address concerns related to job risk from carbon taxation: information and compensation. We conduct two online survey experiments (N=5,487) in four countries: Germany, Sweden, Switzerland, and the United States. First, we use an information provision experiment to confront workers with policy-induced job risk based on their job profiles. We assess their tendency to update job risk beliefs based on ideological predispositions. Second, using a conjoint choice experiment, we analyze whether packaging carbon taxes with different types of compensation schemes for fossil fuel workers increases public support. Our findings reveal that job risks associated with climate policy tend to be exaggerated in the public. However, efforts to counter these concerns with information campaigns have limited effect on carbon tax support. Notably, they can introduce even more polarized views into the discourse because of selective information take-up rooted in directional motivated reasoning. In contrast, offering compensation to at-risk workers via labor market programs (e.g., retraining programs) increases the support for carbon taxation both among at-risk workers and in the wider public. The positive effect of packaging outweighs the negative effect of a change in the tax rate from 10 to 50 USD/tCO2. While certain uses of carbon tax revenue, such as earmarking for climate protection or supporting low-income households, widen the political divide between the left and right, compensation for fossil fuel workers increases support across the political spectrum. Our study underscores the importance of understanding how economic concerns, belief systems, and political ideology interact to shape public responses to disruptive policies, particularly in politically polarized contexts.