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ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS |
RESEARCH ARTICLE
Environmental tax, carbon emmission and
female economic inclusion
Michael Gift Soku
1
*, Mohammed Amidu
1
and Coffie William
1
Abstract: This research examines the nexus between environmental tax, carbon
emission, and female economic inclusion. The study employs a quantitative
research method, utilizing the Generalized method of moments (GMM) on a dataset
of 65 countries from the period 1994 to 2020. The research finds that environmental
tax has a significant negative effect on carbon emission, and that firms with
a higher level of female economic inclusion tend to have lower carbon emission
levels. Furthermore, the research shows that firms with a higher level of female
economic inclusion are more likely to implement environmentally sustainable
practices, which in turn reduces their carbon emission levels. These findings suggest
that policies that promote environmental taxation and female economic inclusion
can be effective in reducing carbon emissions and promoting sustainable business
practices. The sampling technique used in this study is purposive sampling, where
64 countries were selected based on their availability of data on environmental tax,
carbon emissions, and female economic inclusion. The population of the study
comprises all countries that have data available on these variables between the
period of 1994 to 2020. While there are limitations to this study, including the need
for further research to fully understand the complex relationship between environ-
mental taxation, carbon emissions, and female economic inclusion, this research
represents an important contribution to the literature on these critical issues.
Subjects: Environmental Economics; Accounting; Corporate Governance
Michael Gift Soku
ABOUT THE AUTHOR
Michael Gift Soku is a Lecturer at the department of Accounting at the University of Professional
Studies, Accra (UPSA) in Ghana. He is a Chartered Accountant and Chartered Tax Practitioner and has
gained a wealth of industrial experience in the field of Accounting and Finance.
Soku’s research interest include Tax policy, Accounting standards, financial inclusion and Auditing.
Michael Gift Soku
Soku et al., Cogent Business & Management (2023), 10: 2210355
https://doi.org/10.1080/23311975.2023.2210355
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Received: 19 March 2023
Accepted: 01 May 2023
*Corresponding author: Michael Gift
Soku, Accounting Department,
University of Ghana Business School,
Legon LG 25, Accra, Ghana
E-mail: mgsoku@st.ug.edu.gh
Reviewing editor:
Collins G. Ntim, Accounting,
University of Southampton, United
Kingdom
Additional information is available at
the end of the article
© 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
This is an Open Access article distributed under the terms of the Creative Commons Attribution
License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribu-
tion, and reproduction in any medium, provided the original work is properly cited. The terms on
which this article has been published allow the posting of the Accepted Manuscript in
a repository by the author(s) or with their consent.
Keywords: Environmental tax; carbon emission; female inclusion; generalized method of
moments; environmental pollution
1. Introduction
The issue of environmental degradation and its impact on human welfare has become a critical
global concern in recent years. Carbon emissions which is the release of greenhouse gases into the
atmosphere as a result of human activities such as burning fossil fuels, deforestation, and
industrial production is a significant contributor to climate change and have severe implications
for ecological and economic sustainability (Bastida, García-Cartagena, et al., 2020; D. Debnath
et al., 2021). Hence, the need for policies that promote environmental sustainability and economic
development has become a priority for policymakers worldwide. One potential solution is the use
of environmental taxation, which refers to the use of taxes and other market-based instruments to
internalize the external costs associated with environmental degradation. Environmental taxation
can help promote environmentally sustainable practices and encourage the adoption of cleaner
technologies which can help reduce carbon emissions while promoting sustainable economic
growth (Chen & Chen, 2020; Goulder, 2013). Additionally, promoting female economic inclusion
which refers to the integration of women into the economy, where they have equal access to
employment opportunities, resources, and decision-making has been identified as a key strategy
for reducing poverty and promoting sustainable development (Kabeer, 2012; World Bank, 2019). In
this research, we explore the nexus between environmental taxation, carbon emissions, and
female economic inclusion.
The nexus between environmental taxation, carbon emissions, and female economic inclusion
has received increasing attention in recent years. Researchers have explored various aspects of
this topic, from the impact of environmental taxation policies on carbon emissions to the role of
gender in shaping the distributional effects of these policies.
This paper provides an overview of several studies on this topic, summarizing their findings and
highlighting their contributions to literature. For instance, Pless and Rogge (2016) examine the
impact of environmental taxation policies on carbon emissions in OECD countries. They find that
environmental taxes can be an effective tool for reducing carbon emissions, particularly in
countries with high levels of carbon intensity. Despite its contributions, the study by Pless and
Rogge (2016) also has some weaknesses. One potential weakness is that the study focuses only
on OECD countries, which limits its generalizability to other regions of the world. Additionally, the
study does not explore the potential distributional effects of environmental taxation policies on
different segments of the population, including women. This is an important consideration, as
previous research has shown that environmental policies can have differential impacts on
different social groups, particularly those who are already disadvantaged. Another potential
weakness is that the study does not examine the specific design features of environmental
taxes that are most effective in reducing carbon emissions. However, our research seeks to
consider countries within and outside the OECD and examine as well various environmental
policies that can help ensure maximum female economic inclusion in countries. Also, Clancy and
Ruz (2018) provide a comprehensive review of the literature on the intersection of gender,
environmental taxation, and inequality. They find that environmental taxation policies have
the potential to exacerbate gender inequalities, particularly in countries where women are
already disadvantaged in the labor market. However, they also note that gender-sensitive
environmental taxation policies can promote gender equality and reduce environmental harm.
Despite its contributions, the study by Clancy and Ruz (2018) also has some weaknesses. One
potential weakness is that the study relies heavily on secondary sources, such as academic
articles and reports, which may limit its scope and depth. Additionally, the study does not provide
a detailed analysis of the specific design features of environmental taxation policies that are
most effective in promoting gender equality. This information would be useful to our research as
it seeks to design effective environmental taxation policies that promote gender equality.
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Another potential weakness is that the study does not explore the potential trade-offs between
environmental objectives and gender equality objectives in the design of environmental taxation
policies. However, our research seeks to close this gap by exploring potential trade-offs between
environmental objectives and gender equality objectives in the design of environmental taxation
policies. However, it is appalling to note that, all these are similar studies that are linked to our
current study and will contribute massively to our literature.
The theoretical motivation for this research is grounded in the literature on environmental
taxation, carbon emissions, and sustainable development. Our literature suggests that environ-
mental taxation policies can be an effective tool for reducing carbon emissions and promoting
sustainable development. However, policymakers must ensure that these policies are equitable
and progressive and do not place an undue burden on vulnerable groups. The empirical motivation
for this research is based on the growing interest in environmental taxation policies and gender
equality policies at the global level. Many countries are implementing environmental taxation
policies to reduce carbon emissions, promote sustainable development and ensure gender equality
across various industries. For instance, Klasen and Lamanna (2009) found that gender inequality
can be a significant barrier to economic growth and development. Moreover, policies that promote
gender equality can help reduce poverty and inequality and promote economic growth (United
Nations Development Programme UNDP, 2015). These studies highlight the importance of con-
sidering gender-sensitive policy design in the context of environmental taxation and sustainable
development. However, there is a need for further research to explore the implications of these
policies for vulnerable groups, particularly women, and to identify ways to ensure that these
policies are equitable and progressive which makes our current study very important.
Furthermore, this current paper on the nexus between environmental taxation, carbon emis-
sions, and female economic inclusion makes several important contributions to the literature.
Firstly, this paper contributes to the literature on environmental taxation by examining the
potential for environmental taxation policies to reduce carbon emissions. It provides
a comprehensive review of the existing literature on environmental taxation policies and their
impact on carbon emissions in both developed and developing countries. This review highlights the
potential of environmental taxation policies to reduce carbon emissions and identifies key design
features that are likely to be most effective in achieving this goal. Secondly, this paper contributes
to the literature on gender and the environment by exploring the gendered impacts of environ-
mental taxation policies. It highlights the potential for environmental taxation policies to dispro-
portionately affect women, particularly those who are already disadvantaged, and emphasizes the
need for policymakers to consider gender in the design and implementation of environmental
taxation policies. This is an important contribution, as previous research has shown that gender is
an important factor in shaping the distributional effects of environmental policies. Also, this paper
contributes to the literature on economic inclusion by exploring the potential for environmental
taxation policies to promote female economic inclusion. It identifies potential policy solutions that
can simultaneously promote environmental sustainability and gender equality and highlights the
importance of considering gender in the design and implementation of environmental taxation
policies. Lastly, this research identifies avenues for further research to deepen our understanding
of the nexus between environmental taxation, carbon emissions, and female economic inclusion.
In conclusion, this study highlights the complex and multifaceted nature of the nexus between
environmental taxation, carbon emissions, and female economic inclusion. While environmental
taxation policies have the potential to promote sustainable development and reduce carbon
emissions, policymakers must be mindful of the potential distributional effects of these policies,
particularly on vulnerable groups such as women. The rest of the study is organized as follows;
section two reviews pertinent literature surrounding environmental tax, carbon emission and
female economic inclusion, Section three describes the methodological approach. Section four
present the results while section five concludes the entire study.
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According to Eastin (2018), environmental pollution adversely affects girls’ school attendance,
impairs women’s capacity to earn independent income, and ultimately has an impact on gender
equality. Raworth (2012) opines that, given the recent rise in unsustainable development strate-
gies that prioritise economic expansion above and beyond what the world can tolerate, it is
thought that women and children will be the most negatively impacted by the negative effects
of climate change. The underlying idea that gender equality and climate justice must be connected
derives from this. An association between employed women and environmental changes, such as
CO2 emissions in the atmosphere, was found in earlier studies (Kronsell et al., 2016; Lv & Deng,
2019; Waygood & Avineri, 2016; Winslott Hiselius et al., 2019). Women are more concerned about
the environment and perceive the risk as a threat to the environment because they are more
sensitive to it (Buckingham, 2016; Eisler et al., 2003).
According to a study, women have a distinct perspective on environmental issues, are more
concerned about them, and have suggested a potential solution to the problem of environmental
pollution in the United States of America (McCright, 2010). In another study, women’s employment
might increase organisational profits and increase the global gross domestic product by up to 28
trillion dollars annually by 2025 (Trivedi et al., 2019). Higher returns will result from more women
working in the energy sector, and this labour force may contribute to development with low carbon
emissions. There is evidence that having more women in senior positions will increase energy
efficiency and investment in renewable energy, which will ultimately lead to a decrease in CO2
emissions. The majority of the time, women control energy at the household level in low-income
nations. Because of this, women working in sales and marketing jobs can persuade and inspire
other women to utilise sustainable energy sources and give them the space and conveniences they
need to learn about cutting-edge technologies that increase the system’s energy efficiency (Gill
et al., 2012). Additionally, a study revealed that educated women in positions of power plan better
for the society and adopt and promote a green economy and products which are beneficial for the
environment (Kwauk & Braga, 2017).
There are three ways in which environmental pollution affects women’s levels of economic
activity, either directly or indirectly. First, research indicates that environmental pollution directly
affects workers’ health, which in turn affects the number of hours they are productive (ILO, 2018).
Workers may therefore become ill and report to work sick in situations where environmental
degradation reaches severe levels (Montt et al., 2018). As a result, Kim et al. (2017) notes that
over time, the declining labour supply often has an impact on workers’ personal health. According
to Aragon et al. (2017), the second way that environmental pollution affects the labour supply is
through the care of their dependents’ illnesses. Evidence suggests that children are especially
susceptible to the negative effects of air pollution on their health. Last but not least, environmental
degradation frequently causes the ecology and other facilities that support jobs to suffer (Montt
et al., 2018). The majority of women work in climate-sensitive industries including agriculture,
forestry, and fisheries in most developing nations (Terry, 2009). The destruction of the environment
and the loss of natural resources, however, may have a disproportionately negative impact on
female labour participation because the effects of climate change and global warming are brought
on by the production of greenhouse gases. According to studies, women make up the majority of
smallholder farmers who work on marginal areas, which are prone to floods, landslides, droughts,
and other climate hazards (Koehler, 2016).
The discourse on female inclusion and carbon emission has been mostly centered on the inputs
that females can make towards reducing pollution and maintain climate balance (Konadu, Ahinful,
Boakye &;; Kwauk & Braga, 2017; McKinney & Fulkerson, 2015). Unfortunately, there is little data on
how environmental challenges affect gender norms (Denton et al., 2002), and there is even less
information on how it affects women’s participation in the labour force (Montt et al., 2018). The
literature reveals that already marginalised and vulnerable parts of the population experience the
most brunt of the effects of climate change, despite the tendency to believe that women and men
are equally affected by it because the effects are most obvious on social scales. Eastin (2018). This
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study therefore seeks to first identify the effect of carbon emission on the level of female employ-
ment in an economy. More so, given the varied pros and cons of the imposition of environmental
tax in an economy. This study seeks to identify whether the imposition of environmental tax
increases or decreases the level of female employment in an economy. Finally, the study examines
the joint impact of carbon emission and environmental tax on female inclusion. The interaction
between environmental tax and carbon emission on the level of female economic participation is
examined in order to ascertain whether the imposition of environmental tax in an economy will
reduce the level of carbon emission and thus increase the demand for female labour in these
economies. The female labour force participation rate (FLFPR) can boost a nation’s potential output
and economic development as it increases labour supply and, consequently, the country’s produc-
tion capability (Cooray et al., 2017). As a result, a study on how environmental taxes and carbon
emissions affect female inclusion is important.
The study makes the following contribution to literature. First, an assessment of the impact of
carbon emission on the level of female employment/participation is new. Additionally, an exam-
ination of the joint impact of carbon emission and environmental tax also adds new knowledge to
the literature. The outcome from this study informs policy on the management of environmental
tax to reduce carbon emission as well as increase the level of female employment in an economy.
2. Background
Environmental taxation has gained significant attention in recent years, especially concerning its
potential to reduce carbon emissions and promote sustainable development. The primary objective
of environmental taxation is to reduce the negative impacts of human activities on the environ-
ment by internalizing environmental externalities, such as greenhouse gas emissions. This paper
aims to examine the nexus between environmental taxation, carbon emissions, and female
economic inclusion. The paper provides an overview of regulatory, reform, and policy issues and
developments within the context. Environmental taxation refers to the use of taxes, fees, and
charges to internalize the environmental costs of human activities. Environmental taxes are levied
on activities that generate environmental externalities, such as pollution, and the revenue gener-
ated is used to promote sustainable development. Environmental taxation can take various forms,
such as carbon taxes, congestion charges, and waste disposal taxes. Carbon emissions refer to the
release of carbon dioxide and other greenhouse gases into the atmosphere, which contribute to
global warming and climate change. The transportation and energy sectors are the largest
emitters of greenhouse gases. The reduction of carbon emissions is crucial for mitigating the
adverse effects of climate change. Female economic inclusion refers to the participation of
women in the labor market and their access to economic resources, such as education, training,
and finance. Gender inequality is a pervasive issue globally, and women are disproportionately
affected by poverty, discrimination, and marginalization. Female economic inclusion is essential for
promoting economic growth and sustainable development.
Environmental taxation has been widely debated by policymakers, industry stakeholders, and
civil society organizations. One of the significant challenges of environmental taxation is ensuring
that it does not place an undue burden on vulnerable groups, such as low-income households and
small businesses. To address this concern, policymakers must design environmental tax policies
that are equitable and progressive.
Another regulatory issue is the potential for environmental tax policies to lead to carbon
leakage, whereby carbon-intensive activities relocate to countries with less stringent environmen-
tal regulations. To mitigate this risk, policymakers need to adopt a coordinated approach to
environmental taxation at the global level.
Many countries have implemented various forms of environmental taxation in recent years. For
instance, Sweden has introduced a carbon tax that is applied to fossil fuels, and the revenue
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generated is used to fund climate change mitigation and adaptation projects. The United Kingdom
has also introduced a carbon price floor that provides a minimum price for carbon emissions.
In terms of female economic inclusion, many countries have introduced policies and programs
to promote gender equality in the labor market. For instance, Rwanda has introduced a gender
quota system that requires political parties to ensure that at least 30% of their candidates are
women. In India, the government has launched the Beti Bachao Beti Padhao (Save the daughter,
Educate the daughter) program, which aims to improve access to education and employment
opportunities for girls and women.
In conclusion, environmental taxation has the potential to reduce carbon emissions and pro-
mote sustainable development. However, policymakers must ensure that environmental tax poli-
cies are equitable and progressive and do not place an undue burden on vulnerable groups.
Furthermore, promoting female economic inclusion is crucial for achieving sustainable develop-
ment and reducing poverty and inequality. To achieve this, policymakers must adopt policies and
programs that promote gender equality in the labor market and ensure that women have access
to economic resources.
3. Theory and empirical literature
3.1. Theoretical overview
The theory motivating the nexus among environmental tax, carbon emission, and female eco-
nomic inclusion are the double dividend hypothesis and Corrective Taxation.
3.1.1. Double dividend hypothesis
According to the double dividend hypothesis, taxes on consumption, labour, and capital are
reduced while a tax on the environment is imposed. This way, overall government revenues are
unaffected, or revenue neutrality is maintained.
According to this hypothesis, imposing higher taxes on activities that causes pollution may have
two different positive effects.
The first is an improvement in the environment, and the second is an improvement in economic
efficiency due to the reduction of other taxes, such income taxes that affect labour supply and
saving decisions, due to the use of environmental tax revenues (Fullerton & Metcalf, 2007). If there
are economic and environmental benefits, the DD hypothesis is supported (Grubb et al., 1993;
Nordhaus, 1993; Pearce, 1991; Repetto, 1992).
The consequences of environmental taxes on economies, as well as how their conception and
use may influence both economic output and the environment, are still being debated (Babiker
et al., 2003; Carbone et al., 2013; Devarajan et al., 2011). The double dividend (DD) hypothesis
emerges as an intriguing concept in this setting for accomplishing environmental goals since the
policy may result in efficiency improvements that might be used to make up for losers. It entails
enacting an environmental tax or a series of levies while lowering other existing taxes such as
those on labour, capital, or consumption so that overall tax receipts for the government are
unaffected, or, to put it another way, revenues stay neutral. According to Goulder’s concept,
environmental taxes may result in a double dividend by both enhancing environmental quality
and establishing a less distortionary tax structure as governments use the proceeds from pollution
taxes to reduce other distortionary taxes (Chiroleu-Assouline & Fodha, 2006; Goulder, 1995).
Older studies, such as Klasen and Lamanna (2009), have highlighted the potential for gender
inequality to limit economic development in developing countries. These studies suggest that
environmental taxation policies that can simultaneously promote environmental sustainability
and gender equality may be particularly effective at promoting economic development. The double
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dividend hypothesis suggests that such policies may be possible, as the revenue generated by
environmental taxes can be used to support policies that promote gender equality, such as
investments in education or healthcare.
More recent studies, such as Pless and Rogge (2016), have examined the impact of environ-
mental taxation policies on carbon emissions in OECD countries. These studies suggest that
environmental taxation policies can be effective at reducing carbon emissions, particularly when
they are designed to provide a regulatory fit with taxpayers’ political values. The double dividend
hypothesis suggests that the revenue generated by environmental taxes can be used to support
policies that promote female economic inclusion, such as investments in childcare or parental
leave.
Clancy and Ruz (2018) provide a comprehensive review of the literature on the intersection of
gender, environmental taxation, and inequality. They highlight the potential for environmental
taxation policies to disproportionately affect women, particularly those who are already disadvan-
taged. They also emphasize the need for policymakers to consider gender in the design and
implementation of environmental taxation policies. The double dividend hypothesis suggests
that policies that are designed to promote both environmental sustainability and gender equality
may be particularly effective at reducing the negative impact of environmental taxes on women
This theory is relevant to the study since it aims to determine how environmental taxes over the
long term affects carbon emissions and female inclusion. According to this theory, “a cleaner
environment is the first dividend while an increase in female employment or GDP is the second
dividend” (Clinch et al., 2006).
3.1.2. Corrective taxation
The concept of using taxes to address harmful externalities like pollution is traced to Pigou (1920),
and these corrective taxes are sometimes referred to as Pigouvian taxes. Simple logic underpins
the fundamental idea. When a good is produced or consumed and causes harm to a party other
than the buyer or seller, that party is said to have a negative externality. Due to the failure of the
buyer and seller to take the external cost into account, this is a market failure. As a result, any
good with a negative externality will nearly always have an inefficiently huge supply produced by
an unrestrained free market. By levying a tax on the good that causes the externality, the problem
can be fixed. The external cost is included in the transaction, ensuring that the buyer pays the full
marginal social cost of the good, if the tax rate is equal to marginal external damage (the total
harm produced by one additional unit of the good to persons other than the buyer and seller). The
tax incentive guarantees that the market offers the good at the efficient level in the absence of
any other unaddressed market imperfections. If a product’s minor external damage varies
depending on who creates it or how it is created, that could be an issue. For instance, the carbon
dioxide (CO2) emissions from a megawatt-hour of electricity produced by a natural gas-fired
power station are far lower than those from a same amount of electricity produced by a coal-
fired power plant (and even lower if generated by a wind turbine). However, that apparent
complexity can be readily incorporated into this straightforward theory by either categorising
those as separate goods (and consequently levying various tax rates on electricity generated
from various sources) or, more simply, by categorising CO2 emissions as the good with the
negative externality and levying a tax per tonne of CO2 emissions.
Older studies, such as Klasen and Lamanna (2009), have highlighted the potential for gender
inequality to limit economic development in developing countries. These studies suggest that
corrective taxation policies that can simultaneously promote environmental sustainability and
gender equality may be particularly effective at promoting economic development. By internalizing
the negative externalities associated with carbon emissions through taxes, environmental taxation
policies can encourage polluters to reduce their emissions, which in turn can benefit the
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environment and public health. The revenue generated by these taxes can then be used to support
policies that promote female economic inclusion, such as investments in education or healthcare.
More recent studies, such as Pless and Rogge (2016), have examined the impact of environ-
mental taxation policies on carbon emissions in OECD countries. These studies suggest that
corrective taxation policies can be effective at reducing carbon emissions, particularly when they
are designed to provide a regulatory fit with taxpayers’ political values. By making polluters pay for
the negative externalities associated with their emissions, these policies can encourage innovation
and efficiency in pollution abatement, while also generating revenue that can be used to support
policies that promote female economic inclusion.
Also, there are several research in the Ghanaian perspective that sampled the use of corrective
taxation as a theoretical literature in their research. Corrective taxes for environmental protection
in Ghana: An evaluation of the plastic waste levy (Adam & Buabeng, 2017) is an example of
a research that made use of corrective taxation. Again, Examining the impact of corrective taxes
on air pollution in Ghana (Amponsah & Kpienbaareh, 2019) is also another instance. Also, The
impact of corrective taxes on firms’ environmental performance in Ghana (Apau et al., 2019) is also
another example of Ghanaian studies that have sampled corrective taxation as a theory in their
research.
This theory is absolutely applicable to our research since it looks at how environmental taxes can
be implemented to reduce carbon emissions in the global economy, which will eventually encou-
rage the inclusion of women.
3.2. Empirical review
The review of literature on impact of tax policy on environmental pollution point to a scenario that
several researchers assessed this impact by using different models.
3.2.1. The relevance of environmental tax
Environmental taxes have the effect of promoting research into clean energy sources to meet the
population’s growing needs or to lead to the introduction of new technologies, production cycles,
and products, thereby reducing the consumption of polluting raw materials and production of
waste and generating revenue. Despite the literature’s emphasis on the benefits of environmental
taxes, several studies point out their drawbacks. Environmental regulations frequently result in
a decline in manufacturing jobs (Curtis, 2014; Kahn & Mansur, 2013), which is met with vehement
opposition from decision-makers. These regulations may cause manufacturing employment to
move to other industries. However, nothing is known about how these measures would affect
the labour market overall or in terms of distribution. Environmental levies reduce business earn-
ings, which in turn reduces labour demand (Yip, 2018).
The European Union (EU) implemented Environmental Tax Reform (ETR) in the 1990s to assist in
transferring the tax burden from producers to consumers of natural resources and polluters (Ekins
& Speck, 2011). Environmental tax reform and increased environmental taxes, according to studies
by Brännlund et al. (2007) and Bosquet (2000), can benefit the environment and lower carbon
emissions. Yip (2018) calculates the effects of environmental policies on the labour market and
finds that, in the first place, the policy increases the unemployment rate as a whole by 1.3 percen-
tage points. Second, consequences of unemployment vary greatly across demographic groups and
are present regardless of gender or educational level. Males with less education bear the brunt of
the repercussions of unemployment. Third, the percentage of job losses rises independent of
gender or educational level, indicating that the policy’s involuntary unemployment is substantially
to blame. Fourth, after the policy, layoffs for unemployed men with a medium level of education
are more likely to be transitory. Fifth, even while the policy does not favour layoffs of temporary or
part-time employees, it results in an increase in the number of males with medium or low
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education who are hired on a temporary or part-time basis. Sixth, the strategy eventually lowers
the low-educated group’s labour force participation (LFP) rate.
According to Miller and Vela (2013), nations that collect more environmental taxes also have
superior reductions in CO2 emissions per person, energy use, the use of fossil fuels, and water
pollution. By examining the effect of environmental taxes on the levels of air pollution and energy
consumption, Morley (2012) evaluated the influence of environmental taxes on environmental
protection actions. They discovered that the EU’s implementation of environmental fees has
a significant impact on reducing pollution, but has little bearing on the usage of natural resources.
According to the study, the effectiveness of environmental taxes is strongly influenced by how
much of other taxes and overall tax revenue is collected in relation to environmental taxes.
B. Wang et al. (2018) ‘s research demonstrates how environmental taxes can both improve
pollution management outcomes and mitigate ecological environment losses. Piciu and Tric
(2012) demonstrate that environmental taxes can be paid back to polluters, demonstrating that
under some circumstances, environmental taxes can reduce pollution and safeguard the environ-
ment. Only after high-tech, reasonably priced solutions have been found are environmental taxes
useful for completely reducing carbon dioxide emissions. According to G. Niu et al. (2014), envir-
onmental tax shocks can lead to a decrease in carbon emissions. According to B. Wang et al.
(2018), China might reduce CO2 and air pollution emissions more effectively by enacting higher
environmental and carbon tax levels.
3.2.2. Environment, carbon emissions and labour participation
The nexus between carbon emission and labour have been given attention in the literature.
A detailed analysis of China’s embodied carbon emission and labour income share by Y. Wang
and Song (2014) revealed that the labour income share would decrease significantly if the
embodied carbon emission was reduced. The relationship between Chinese education spending,
female employment, use of renewable energy, and CO2 emissions is empirically investigated by
Zaman et al. (2021). The study’s conclusions suggest that raising education spending, expanding
the number of female employers, and boosting the use of renewable energy as a share of total
energy use will all contribute to lowering CO2 emissions in China over the long and short terms. On
the other hand, S. H. Wang et al. (2019) analyse the global value chain to evaluate the relationship
between carbon emissions and labour income share in the imports and exports of intermediate
items. According to empirical findings, worker income shares in developing nations has a negative
association with trade and a positive link with embodied carbon emission. Zhang et al. (2018)
looked into how environmental pollution affected China’s labour supply. Their findings revealed
that the impact of pollution on labour supply is negatively and nonlinearly correlated with
economic development levels.
According to Almunem et al. (2018), a variety of economic, structural, social, and demographic
characteristics have an impact on women’s economic involvement. Economic factors were the
best at explaining 51% of the phenomenon of female labour market involvement; GDP per capita
was the biggest explanatory factor favouring female labour market participation. 28% of the entire
occurrence was interpreted in light of demographic factors. Tertiary education was the strongest
explanatory factor within this set of determinants as it positively affects females’ participation in
the labour market. Social determinants also play a significant role in the interpretation of females’
participation in the labour market, which is estimated to be of relative importance at 21%. Weak
evidence of the U-shaped association between the log of per capita Gross Domestic Product and
FLFP rate was found in a different study by Verick (2018) utilising cross-section data on 172
developing nations. And he concluded that a variety of socioeconomic factors, such as education,
societal standards, and the type and potential for job development, are what drive FLFP. Only
empirical review on FLFP was used to analyse Reena Kumari (2018). She discussed the beneficial
link between FLFP, economic growth, and female education. The report also reveals a sizable
gender pay disparity that disadvantages women. She also mentioned that a variety of variables,
including demographic ones (such as fertility, migration, marriages, and child care), economic ones
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(such as unemployment, per capita income, non-farm jobs, and infrastructure), and other expla-
natory ones (such as the regulatory context encompassing family and childcare policies, tax
regimes, and the presence of subsidised health- and care for workers) influence FLFP. According
to Langnel et al. (2021), environmental pollution has an impact on women’s economic inclusion.
They note that CO2 intensity (emission from solid fuels like wood, charcoal, and coal) and CO2
emission (metric per capita) appear to have a negative impact on female economic inclusion, as do
CO2 emissions from electricity and heat, liquid and fuel consumption, and CO2 emissions. This
suggests that the participation of women in the labour force is disproportionately impacted by
environmental degradation. A fresh perspective on the connection between female labour force
participation and economic growth in 162 world countries from 1990 to 2012 was offered by
Lechman and Kaur (2015). The U-shaped association between female labour force participation
and economic growth was substantiated by their findings. In 29 OECD nations, Tatli and BARAK’s
(2019) study looked at the connections between energy use and female unemployment. The
results show that energy use has a strong and negative relationship with female unemployment.
Elhaj and Pawar (2019) investigate the socioeconomic and environmental factors that have an
impact on women’s labour force participation in Saudi Arabia between 1990 and 2018. They
discovered that education had little effect on female labour force participation in the short run.
evaluating the claim made by ecofeminists that women are more inclined than males to embrace
environmental protection legislation. According to Ergas and York (2012), countries with higher
political status for women have lower carbon dioxide emissions per capita than nations with fewer
political rights for women. Similar to this, McKinney and Fulkerson (2015) observed that countries
with more women in governing bodies are less likely to have large climate footprints.
At the end of the day, it can be said that labour force participation is crucial in this context
because it is associated with female empowerment in the household and in larger society. Women
who actively participate in the workforce have more control over the economic decisions that
affect their lives and social priorities. This study’s major question is: To what extent does environ-
mental taxes and carbon emissions influence the economic inclusion of women in high- and
middle-income countries?
4. Methods
4.1. Data sources
This study employs macro country-level data. The data contains information on environmental
pollution, taxes and other economic information on the countries under study. The sources of
these data are World Development indicator database (World bank) and the Organization of
economic and cooperative development (OECD). The data covers a sample of 65 countries over
the period of 1994 to 2020.
4.2. Research design and approach
The research makes use of a quantitative approach as its research design. A quantitative research
design is a research approach that involves the collection and analysis of numerical data to test
research hypotheses and answer research questions. This approach was chosen because we
believed it will serve as the best measure of the relationship between environmental taxation,
carbon emission and female economic inclusion since it will easily determine the strength and
direction of the relationship between the variables and provide insights into how environmental
taxation policies can impact female economic inclusion.
4.3. Population and sampling technique
The population of the study comprises all countries that have data available on these variables
between the period of 1994 to 2020. The sampling technique used in this study is purposive
sampling, where 64 countries were selected based on their availability of data on environmental
tax, carbon emissions, and female economic inclusion.
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4.4. Variables and measurements
The main variables for the study are female economic inclusion, environmental tax and carbon
emission.
Previous authors have made use of the variables; environmental taxation, carbon emissions and
female economic inclusion in the studies. For instance, Bastida, García-Cartagena, et al. (2020)
examined the relationship between environmental taxation and carbon emissions in a sample of
28 European Union countries. Although the study did not focus explicitly on female economic
inclusion, it provides insights into the potential impact of environmental taxation on carbon
emissions, which could have spillover effects on economic activity and employment, including
for women. Similarly, D. Debnath et al. (2021) explored the relationship between carbon emissions
and economic growth in South Asia. The study did not explicitly examine environmental taxation
or female economic inclusion. However, it highlights the importance of balancing economic growth
and environmental sustainability and suggests that policy interventions, such as environmental
taxation, may be necessary to achieve this balance. Another relevant study by Raza et al. (2019)
examined the relationship between carbon emissions and economic growth in a sample of 57
developing countries, with a focus on the role of environmental taxation. The study found that
environmental taxation was negatively associated with carbon emissions and suggested that such
policies could be effective in reducing emissions while also promoting economic growth. Generally,
while there is limited research that has examined the relationship between environmental taxa-
tion, carbon emissions, and female economic inclusion together, these studies highlight the
importance of considering the interplay between economic, environmental, and social factors in
policy design and analysis.
Female inclusion is the dependent variable. The suitable definition of female economic inclusion
used in this paper is taken from the Organization for Economic Cooperation and Development
(OECD), which defines it as “the capacity of women (ages 15 and over) to participate in, contribute
to, and benefit from growth processes in ways that recognise the value of their contributions, respect
their dignity, and make it possible for them to negotiate for fairer distribution of the benefits of
economic development”. Environmental tax is defined as the environmental tax revenue as
a percentage of GDP. Data on environmental tax is sourced from OECD. Carbon emission is measured
as the rate of carbon emission per kilo ton as defined by the world bank.
Other variables are employed to control the errors and variations in the estimations. In order to
stabilize the economic and environmental variations in our study, Population growth, trade, life
expectancy, energy consumption and GDP per capita are included as control variables. These
variables are sourced from the World bank. Population growth is defined as the percentage growth
in population of a country from previous year. Trade is measured as the sum of exports and
imports as a ratio of GDP. Life expectancy is the proxy for general health of a country it is
measured as the expected number of years a newborn is expected to leave if conditions underlying
birth remains unchanged. Energy Consumption is measured as the debased GDP with oil equivalent
of energy use. GDP per capita, the proxy for economic growth, is the GDP as a percentage of
population. A country’s growth and development as well as general economic health are both
indicated by its GDP per capita (I. B. Gaddis & Klasen, 2012).
4.5. Empirical estimation
A dynamic panel model is adopted to analyse the results, more specifically a twostep Generalized
Methods of Moments (System GMM) Approach is used. The GMM method selects the parameter
vector that minimises the discrepancy (or difference) between the population moment values and
the sample moment values (where the orthogonality conditions are set to zero).
In essence, GMM is a two-step process. As it provides results that are resilient to outliers and
resolves endogeneity issues in the model, this is favoured to the ordinary least square (OLS).
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A significant econometric issue is created by the fixed effects model’s usage of a lagged
dependent variable. Lagged values of the dependent variable are included as a regressor in the
Generalized Method of Moments (GMM).
To address the potential endogeneity problem that could damage the model, the study makes
use of the benefits of the systems GMM. According to Roodman (2009), the lag dependent variable
may correlate with the independent variables or the error term, and similarly, the dependent
variable may affect some of the explanatory variables. For instance, the government may be
required to improve population health (life expectancy) if the supply of female labour continues
to decline, which is evidence of endogeneity. Again, using Hansen over-identification and second-
order serial correlation tests that are captured in the estimator’s power, the GMM estimator aids in
the validation of the instruments employed in the model. The issue of omitted variable bias, which
can invalidate the outcomes, can also be resolved via GMM. According to the panel dataset, the
nations or cross sections are larger than the time dimension, which is the primary argument for
the use of this estimator (Daumal & Ozyurt, 2010).
To examine the impact of environmental tax on female inclusion, the following model is
estimated;
FIit ¼α1FIit1þα2ETit þ∑k
j¼nαjxij þεi(2:1)
Next, the impact of carbon emission on female inclusion is examined with the model below;
FIit ¼α1FIit1þα2CEit þ∑k
j¼nαjxij þεi(2:2)
Finally, the joint impact for carbon emission and environmental tax on female inclusion is exam-
ined as follows;
FIit ¼α1FIit1þα2ETit þα3CEit þα4ETi�CEit
ð Þ þ ∑k
j¼nαjxij þεi(2:3)
Where FSit is the measure for female inclusion in country i, over time t ETit is the measure for
environmental tax in country i, over time t. CEit is the measure of carbon emission for country i at
time t ETi�CEit is the interaction between environmental tax and carbon emission and ∑
k
j¼n
αjxij is
the sum of k control variables employed in the model. These variables have been defined in
section 3.2.
5. Analysis and presentation of results
5.1. Descriptive statistics
Table 1 present the descriptive statistics for the individual variables involved in the study. From the
table, female employment participation rate has a mean of 60.86% a minimum value of 25% and
a maximum value of 86%. On average, the level of female labour representation among the
economies studied is relatively moderate. Environmental tax has a mean of 1.96, with minimum
vale of −1.53 and a maximum value of 5.36. The average contribution of environmental tax to
a dollar of GDP is 1.96. The average emission per kilo ton of carbon into the atmosphere is 10.83.
The overall average population growth among the 64 countries is 0.79%. Thus, these economies
experienced a 0.79% growth in their population over the period. The average contribution of trade
to economic growth is 92.29. Thus, there is a rapidly high level of trade amongst the economies.
Life expectancy, the proxy for population health has a mean of 75.25, a standard deviation of 6.29,
a minimum value of 50.23 and a maximum value of 84.62. The average life expectancy of 75.25
shows a relatively high level of health among the economies. The average level of Energy
consumption on the other hand is 8.16.per kilogram. The average level of economic growth per
population is 9.42%.
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The pairwise correlation matrix is presented in Table 2. The pairwise correlation matrix gives
a firsthand information on the perceived relationship among the variables of interest. From the
table, both environmental tax and carbon emission have a strong positive correlation with female
inclusion. Population health and GDP per capita also have a strong positive correlation with female
inclusion. This is practical, as Countries with higher GDP per capita tend to have more developed
economies, which often means more opportunities for women to participate in the workforce and
other aspects of society. As women become more financially independent, they may also have
more say in decisions that affect their lives and greater access to education and healthcare, which
can improve their overall health outcomes. Also, population growth and GDP per capita have
a strong negative correlation with female inclusion. Over all, the matrix shows the absence of
multicollinearity as the correlation coefficients are below 0.7.
The two step GMM results are presented in Table 3. The F test of overall joint significance has a p
value below 0.01, implying that the model is fit. Diagnostic test for instrument count and endo-
geneity is insignificant across all three models, thus showing that the instruments are well
specified, and issues of endogeneity have been sufficiently dealt with. Additionally, the number
of groups for each model is greater than the number of instruments.
The first column present results on the first research objective which is to examine the impact of
carbon emission on female inclusion. The second column presents results on the second objective
which is to examine the impact of environmental tax on female inclusion. The third column present
the result on the joint impact of environmental tax and carbon emission on female inclusion.
From the results, the lag of female inclusion is positive and significant. The positive significant lag implies
that previous female labour participation rate affects the present rate. No significant relationship exists
between carbon emission and female inclusion. However, Langnel et al. (2021) find that the participation
of women in the labour market is adversely affected by environmental contamination. On the relationship
between environmental tax and female inclusion, a positive significant impact is observed.
Table 1. Descriptive statistics
Table 1 presents the descriptive statistics of the variables used in this study. The sample
consists of 65 countries during the period 1994–2020. Female inclusion is female labour
participation rate. Environmental tax is environmental tax revenue as a percentage of GDP.
Carbon emission is carbon emission per capita(kt)) Population Growth is the exponential
percentage growth in total population. Trade is Trade as a percentage of GDP. Life expectancy
is the number of years a newborn infant would live if prevailing patterns of mortality at the
time of its birth were to stay the same throughout its life. Energy Consumption is the GDP per
kilogram of oil equivalent of energy use. GDP per Capita is gdp as a percentage of total
population.
Variable Obs Mean Std. Dev. Min Max
Female
Inclusion
1690 60.864 10.582 25.02 86.17
Environmental
Tax
1602 1.966 1.071 −1.53 5.36
Carbon
Emission
1690 10.836 1.821 6.937 16.186
Population
growth
1755 .786 .993 −3.848 5.322
Trade 1709 92.288 61.745 13.388 437.327
Life expectancy 1725 75.25 6.285 50.232 84.616
Energy
Consumption
1335 8.164 3.603 1.704 24.479
GDP per Capita 1748 9.421 1.106 5.349 11.725
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Table 2. Pairwise correlation
Table 2 presents inferential statistics between some selected variable. Female inclusion is female labour participation rate. Environmental tax is environmental
tax revenue as a percentage of GDP. Carbon emission is carbon emission per capita(kt)) Population Growth is the exponential percentage growth in total
population. Trade is Trade as a percentage of GDP. Life expectancy is the number of years a newborn infant would live if prevailing patterns of mortality at the
time of its birth were to stay the same throughout its life. Energy Consumption is the GDP per kilogram of oil equivalent of energy use. GDP per Capita is gdp as
a percentage of total population * indicates a significance level of 5% or more.
Variables (1) (2) (3) (4) (5) (6) (7) (8)
(1) Female
Inclusion
1.000
(2) Environmental
Tax
0.140* 1.000
(3) Carbon
Emission
0.153* −0.041 1.000
(4) Population
growth
−0.264* −0.418* −0.138* 1.000
(5) Trade −0.027 0.065 −0.353* 0.125* 1.000
(6) Life
expectancy
0.338* 0.321* 0.239* −0.218* 0.112* 1.000
(7) Energy
Consumption
−0.128* −0.098* −0.220* 0.269* 0.187* 0.204* 1.000
(8) GDP per Capita 0.461* 0.386* 0.235* −0.042 0.248* 0.666* 0.185* 1.000
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The positive relation implies the imposition of environmental tax increases the level of female
employment in an economy. Other studies however identify different outcome. According to Curtis
(2014) and Kahn and Mansur (2013) environmental regulations typically result in a decline in
manufacturing jobs, which is met with strong opposition from legislators, additionally, Yip (2018)
opines that environmental taxes reduce businesses’ revenues, which in turn reduces labour
demands. Walker (2013) breaks down the mechanism of environmental regulation resulting in
unemployment. According to him, high productivity costs are also a result of strict environmental
regulations. Enterprises reduced worker pay in order to reduce compliance expenses which
resulted in widespread unemployment and changed labor-intensive industries.
The joint impact of environmental tax and carbon emission on female inclusion is negative.
A negative relation between the variables of interest reveals that as the level of carbon emission
rises, the positive impact of environmental tax on female inclusion reduces. Thus, environmental
tax is able to some extent increase the level of female employment when there is low level of
carbon emissions. Hence if governmental policies are directed towards increasing environmental
tax with the quest of reducing carbon emission in the atmosphere, this will affect the rate of
female employment in the economy.
Some positive significant relationships are observed among the control variables. Population
growth, trade, life expectancy and energy consumption increase as female employment increases.
A growth in the population increases the female employment rate at it make the supply of female
labour available in the economy. According to literature, Trade on the other hand increases female
inclusion because trading in all its forms builds capacity for females to participate in economic
activities thus creating employment avenues as well as contribute to economic growth and in the
long run standard of living. The industry of tradable products, which includes tourism, financial
services, and information technology, may grow as trade openness rises. As a result, there will be
more options for employment, particularly for women entering the workforce (Cooray et al., 2017;
Ghosh, 2021; I. Gaddis & Klasen, 2014). But Mujahid et al. (2013). Recognize that the inclusion of
women in Pakistan is badly impacted by trade openness. With the addition of women, life expectancy,
a gauge of the general health of a population and economy increases. Healthy population implies
healthy supply of labour force. Thus, as there is high level of sound health among the general
population, there is increased healthy supply of female labour into the economy. GDP per capita
reduces the level of female inclusion. Thus, at high level of economic boom, the level of female
employment drops while at low levels of economic growth the level of female employment increases.
This result is at contradiction with those of Ghosh (2021) and Muhammed and Noman (2013), who find
that female inclusion in Pakistan’s economy boosts economic growth. Energy usage, according to
Lechman and Kaur (2015), raises the rate of female unemployment. The results of this study demon-
strate that, energy usage rises as labour force participation does, countering their conclusions
6. Conclusion
The nexus between environmental taxation, carbon emissions, and female economic inclusion is
a complex and multifaceted issue that requires careful consideration by policymakers, industry
stakeholders, and civil society organizations. This paper has provided an overview of the regula-
tory, reform, and policy issues and developments within the context.
The findings of this research indicate that environmental taxation can be an effective tool for
reducing carbon emissions and promoting sustainable development. However, policymakers must
ensure that environmental tax policies are equitable and progressive and do not place an undue
burden on vulnerable groups. Furthermore, promoting female economic inclusion is crucial for
achieving sustainable development and reducing poverty and inequality.
This research makes several contributions to the literature. Firstly, it provides a comprehensive
overview of the nexus between environmental taxation, carbon emissions, and female economic
inclusion. Secondly, it highlights the importance of adopting a coordinated approach to
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Table 3. Regression results
Table 3 presents the result for the joint impact of carbon emission and environmental tax on
female inclusion using a dynamic two step system GMM, Windmeijer-corrected standard
error, small sample adjustment and orthogonal deviation. The dependent variable is Female
inclusion which is measured as Female labour participation rate. Environmental tax is
environmental tax revenue as a percentage of GDP. Carbon emission is carbon emission per
capita(kt)) Population Growth is the exponential percentage growth in total population. Trade
is Trade as a percentage of GDP. Life expectancy is the number of years a newborn infant
would live if prevailing patterns of mortality at the time of its birth were to stay the same
throughout its life. Energy Consumption is the GDP per kilogram of oil equivalent of energy
use. GDP per Capita is gdp as a percentage of total population. Standard errors are in
parentheses; ***, ** and * indicate statistical significance at 1%, 5% and 10% respectively.
Diagnostic tests: (1) number of observations, (2) The instrument count, (3) the Arellano-Bond
(AB2) test for first and second order serial correlations in the residuals with a null hypothesis
of no second order serial correlation, (4) The Hansen test for over identifying restrictions with
the null hypothesis of exogenous instruments, (5) the F-test for joint significance of
instruments
Variables (1)
Female Inclusion
(2)
Female Inclusion
(3)
Female Inclusion
Female Inclusion 0.290*** 1.025*** 0.870***
0.0679 0.0336 0.0963
Ent tax 0.171* 12.54**
0.0912 4.768
Carbon Emission 2.351 1.909
3.112 1.221
Ent tax*C02 −1.141**
0.433
Population growth −0.0650 0.182* 0.0983
0.277 0.105 0.154
Trade 0.00978 0.00205* 0.0153**
0.0115 0.00109 0.00630
Life Expectancy 0.409*** −0.0167 0.0767
0.124 0.0125 0.129
Energy Consumption 0.587*** 0.0477*** 0.00819
0.179 0.0178 0.115
GDP per Capita −1.804* −0.0289 0.0765
1.020 0.193 0.447
Constant −2.243 −0.690 −21.11
26.04 0.583 13.66
Observations 1,253 1,183 1,183
Number of groups 63 63 63
No. of instruments. 9 16 23
AB2 −1.139 0.0871 0.836
P-value 0.255 0.931 0.403
Hansen’s Test 0.324 1.934 19.00
P-value 0.569 0.983 0.123
F-test 449.9 384646 4601
P-value 0.000 0.000 0.000
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environmental taxation at the global level to mitigate the risk of carbon leakage. Thirdly, it
emphasizes the need for policymakers to adopt policies and programs that promote gender
equality in the labor market and ensure that women have access to economic resources.
The implications of this research are significant for policymakers, industry stakeholders, and civil
society organizations. The findings suggest that environmental taxation policies must be designed
carefully to ensure that they do not place an undue burden on vulnerable groups, and that
promoting female economic inclusion is crucial for achieving sustainable development.
However, there are several limitations to this research that should be considered. Firstly, the
research only sampled two theories for the study, and thus, there may be a limitation to the study.
Secondly, the research focuses on the nexus between environmental taxation, carbon emissions,
and female economic inclusion and does not consider other factors that may affect sustainable
development. Lastly, the research only considers 64 countries for the analysis of the nexus
between environmental taxation, carbon emissions, and female economic inclusion.
Further research is needed to address these limitations and deepen our understanding of the
nexus between environmental taxation, carbon emissions, and female economic inclusion. Future
research could focus on conducting empirical studies to analyze the effectiveness of environmen-
tal taxation policies in reducing carbon emissions and promoting sustainable development.
Moreover, future research could explore the potential for environmental taxation policies to impact
gender equality and female economic inclusion broadly.
Overall, this research highlights the importance of adopting a comprehensive and coordinated
approach to promote sustainable development while ensuring that vulnerable groups, such as low-
income households and women, are not disproportionately affected.
Author details
Michael Gift Soku
1
E-mail: mgsoku@st.ug.edu.gh
ORCID ID: http://orcid.org/0000-0002-8333-2662
Mohammed Amidu
1
ORCID ID: http://orcid.org/0000-0002-0210-137X
Coffie William
1
1
Accounting Department, University of Ghana Business
School, Legon, Accra, Ghana.
Disclosure statement
No potential conflict of interest was reported by the
authors.
Citation information
Cite this article as: Environmental tax, carbon emmission
and female economic inclusion, Michael Gift Soku,
Mohammed Amidu & Coffie William, Cogent Business &
Management (2023), 10: 2210355.
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