Efficiency Wages, Unemployment, and Environmental Policy

Garth Heutel and Xin Zhang

No 27960, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the incidence of pollution taxes and their impact on unemployment in an analytical general equilibrium efficiency wage model. We find closed-form solutions for the effect of a pollution tax on unemployment, factor prices, and output prices, and we identify and isolate different channels through which these general equilibrium effects arise. An effect arising from the efficiency wage specification depends on the form of the workers' effort function. Numerical simulations further illustrate our results and show that this efficiency wage effect can fully offset the sources-side incidence results found in models that omit it.

JEL-codes: H22 J64 Q52 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-ene, nep-env, nep-lab and nep-reg
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Garth Heutel & Xin Zhang, 2021. "Efficiency wages, unemployment, and environmental policy," Energy Economics, vol 104.

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