Environmental policy and human capital inequality: A matter of life and death

Karine Constant

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Abstract: This paper analyzes the economic implications of an environmental policy when we account for the life expectancy of heterogeneous agents. In a framework in which everyone su ers from pollution but health status also depends on individual human capital, we find that the economy may be stuck in a trap in which inequality rises steadily, especially when the initial pollution intensity of production is too high. We emphasize that such inequality is in the long run costly for the economy in terms of health and growth. Therefore, we study whether a tax on pollution associated with an investment in pollution abatement can be used to address this situation. We show that a stricter environmental policy may allow the economy to escape from the inequality trap while enhancing the long-term growth rate when the initial inequality in human capital is not too large.

Keywords: Endogenous Growth; Environmental Policy; Human Capital; Inequality; Longevity (search for similar items in EconPapers)
Date: 2019-09
Note: View the original document on HAL open archive server: https://hal.science/hal-03148461v1
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Citations: View citations in EconPapers (9)

Published in Journal of Environmental Economics and Management, 2019, 97, pp.134-157. ⟨10.1016/j.jeem.2018.04.009⟩

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Related works:
Working Paper: Environmental policy and human capital inequality: A matter of life and death (2021)
Journal Article: Environmental policy and human capital inequality: A matter of life and death (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03148461

DOI: 10.1016/j.jeem.2018.04.009

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