The Effect of Bottle Laws on Income: New Empirical Results
American Economic Review · 2011 · Volume 101 · Issue 3
Abstract
Eleven US states have "bottle laws," deposit-refund programs that combine a consumption tax with a recycling rebate. When states set the bottle deposit low enough it becomes a tax on high wage earners, for whom the opportunity cost of their time prevents them from returning containers for their deposit. However, this bottle deposit will still be high enough that harvesting recyclables provides employment for low wage earners. Using individual data on observed cash recycling behavior, this paper shows that an unintended consequence of bottle laws is that they have the potential to increase the incomes of very low wage workers.
Keywords
Business Taxes and Subsidies including sales and value-added (VAT), State and Local Taxation, Subsidies, and Revenue, Air Pollution, Water Pollution, Noise, Hazardous Waste, Solid Waste, Recycling
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