Wealth Heterogeneity and Escape from the Poverty-Environment Trap

Masako Ikefuji and Ryo Horii ()

Journal of Public Economic Theory, 2007, vol. 9, issue 6, pages 1041-1068

Abstract: A mutual link between poverty and environmental degradation is examined in an overlapping generations model. Environmental quality affects labor productivity and wealth dynamics, whereas wealth distribution determines the degree to which agents rely on technology that has a large environmental load, and therefore the evolution of environmental quality. This interaction creates a "poverty-environment trap," where a deteriorated environment lowers income, which, in turn, accelerates environmental degradation. We show that greater wealth heterogeneity is the key to escaping from the poverty-environment trap, although it can have negative effects on both the environment and output when not in the trap. Copyright 2007 Blackwell Publishing, Inc..

Date: 2007

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Related works:
Working Paper: Wealth Heterogeneity and Escape from the Poverty-Environment Trap (2005)
Working Paper: Wealth Heterogeneity and Escape from the Poverty-Environment Trap (2005)
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