The structural shift to green services: A two-sector growth model with public capital and open-access resources

Emanuele Campiglio

Structural Change and Economic Dynamics, 2014, vol. 30, issue C, 148-161

Abstract: An expansion of economic activities with low impact on ecological resources is a crucial component of the transition to a low-carbon society. “Green” structural change is analysed here through a model with a “progressive” manufacturing sector and a “stagnant” service sector. The latter represents an increasingly demanded class of services characterised by high intensity of labour, low productivity growth and reduced impact on resources. A stock of public capital enhances productivity growth in the manufacturing sector, whose output negatively affects an environmental asset entering households’ welfare function. Along the balanced growth path a substitution process between “dirty” consumption and the open-access asset takes place, leading to a stagnation in welfare despite the positive growth rate. Structural change towards green service occurs along the transition to the BGP any time the public-to-private capital ratio is above its long-run level, and is associated with a decrease in consumption growth, a reduction in working hours and a decline in the environmental degradation rate. A numerical example illustrates that the overall positive effect on households’ welfare can be positive. Finally, it is shown how infrastructure policies can have non-trivial consequences on long-run growth, welfare and environmental sustainability.

Keywords: Structural change; Green services; Low-carbon economy; Public capital (search for similar items in EconPapers)
JEL-codes: H54 O41 O44 Q50 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: The structural shift to green services: A twosector growth model with public capital and open-access resources (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:30:y:2014:i:c:p:148-161

DOI: 10.1016/j.strueco.2014.05.003

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