Environmental Policy and Inequality: A Matter of Life and Death

Karine Constant

Working Papers from HAL

Abstract: This paper analyzes the economic implications of an environmental policy when we take into account the life expectancy of heterogeneous agents. In a framework where everyone suffers from pollution, but health status depends also on individual human capital, we find that the economy may be stuck in a trap where inequalities persistently grow, when the initial level of pollution is too high. Therefore, we study whether a tax on pollution associated with an investment in pollution abatement can be used to reduce inequalities and to improve endogenous growth. We obtain that a tighter environmental policy may allow the economy to escape the inequality trap and hence to converge to a long-term equilibrium without inequality, while it enhances the long-term growth rate. However, if inequalities or pollution are initially too high, such a result does not hold for reasonable tax rates.

Keywords: environmental policy; endogenous growth; human capital; inequality; longevity (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01174052v1
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Environmental policy and inequality: A matter of life and death (2017)
Working Paper: Environmental Policy and Inequality: A Matter of Life and Death (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01174052

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