There are two main veins of literature examining the distributional effects of carbon policy - the effects on households and the effects on production sectors (ie: employment).

These literatures have generally arisen from two common arguments against carbon policies – that these polices disproportionately affect lower income households and that the overall effect on jobs and businesses will be negative.

However, existing research finds that well-designed carbon policies are consistent with growth, development and poverty reduction. Both literatures provide guidance for policy design in this regard. This paper brings together the guidance from both literatures.