Environmental policy, pollution, unemployment and endogenous growth

Lars Haagen Pedersen; Søren Bo Nielsen; Peter Birch Sørensen

doi:10.1007/BF00877496

Environmental policy, pollution, unemployment and endogenous growth

Lars Haagen Pedersen, Søren Bo Nielsen, Peter Birch Sørensen

Department of Economics

47 Citations (Scopus)

Abstract

The paper develops a model of endogenous economic growth with pollution externalities and a labor market distorted by union monopoly power and by taxes and transfers. We study the optimal second-best pollution tax and abatement policy and find that a shift toward greener preferences will tend to reduce unemployment, although it will hamper growth. We also find that greater labor-market distortions call for higher pollution tax rates. Finally, we show that a switch from quantity control of pollution combined with grandfathering of pollution rights to regulation via emission charges has the potential to raise employment, growth, and welfere without damaging the environment

Original language	English
Journal	International Tax and Public Finance
Volume	2
Issue number	2
Pages (from-to)	185-205
ISSN	0927-5940
DOIs	https://doi.org/10.1007/BF00877496
Publication status	Published - 1995

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10.1007/BF00877496

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title = "Environmental policy, pollution, unemployment and endogenous growth",

abstract = "The paper develops a model of endogenous economic growth with pollution externalities and a labor market distorted by union monopoly power and by taxes and transfers. We study the optimal second-best pollution tax and abatement policy and find that a shift toward greener preferences will tend to reduce unemployment, although it will hamper growth. We also find that greater labor-market distortions call for higher pollution tax rates. Finally, we show that a switch from quantity control of pollution combined with grandfathering of pollution rights to regulation via emission charges has the potential to raise employment, growth, and welfere without damaging the environment",

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AU - Pedersen, Lars Haagen

AU - Nielsen, Søren Bo

AU - Sørensen, Peter Birch

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N2 - The paper develops a model of endogenous economic growth with pollution externalities and a labor market distorted by union monopoly power and by taxes and transfers. We study the optimal second-best pollution tax and abatement policy and find that a shift toward greener preferences will tend to reduce unemployment, although it will hamper growth. We also find that greater labor-market distortions call for higher pollution tax rates. Finally, we show that a switch from quantity control of pollution combined with grandfathering of pollution rights to regulation via emission charges has the potential to raise employment, growth, and welfere without damaging the environment

AB - The paper develops a model of endogenous economic growth with pollution externalities and a labor market distorted by union monopoly power and by taxes and transfers. We study the optimal second-best pollution tax and abatement policy and find that a shift toward greener preferences will tend to reduce unemployment, although it will hamper growth. We also find that greater labor-market distortions call for higher pollution tax rates. Finally, we show that a switch from quantity control of pollution combined with grandfathering of pollution rights to regulation via emission charges has the potential to raise employment, growth, and welfere without damaging the environment

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DO - 10.1007/BF00877496

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VL - 2

SP - 185

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JO - International Tax and Public Finance

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Environmental policy, pollution, unemployment and endogenous growth

Abstract

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