Reassessing the effects of environmental taxation when pollution affects health over the life-cycle

Nathalie Mathieu-Bolh () and Xavier Pautrel ()

Economic Modelling, 2016, vol. 52, issue PB, 310-321

Abstract: We introduce the link between pollution, morbidity and productivity over the life-cycle in a two-period overlapping generations model. As the environmental tax improves the health-profile over the life-cycle, it influences saving, investment in health, labor supply and retirement. As a result, we identify effects of environmental taxation beyond the standard crowding-out and productivity effects captured by the past literature. We show that whether those effects are positive or negative for the economy crucially depends on the degree of substitutability between young and old labor. Our numerical examples suggest that that those new effects alleviate the negative effects of environmental taxation on output and decrease potential positive welfare effects.

Keywords: Environmental tax; Pollution; Health; Life-cycle; Overlapping generations (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999315002485
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:52:y:2016:i:pb:p:310-321

DOI: 10.1016/j.econmod.2015.09.002

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().