A Search Theoretic Approach on Environmental Taxation under Productive Differentials: A Note

Stamatina Hadjidema and Konstantinos Eleftheriou

International Advances in Economic Research, 2013, vol. 19, issue 2, 153-166

Abstract: A considerable amount of literature argues that environmental taxation fails to create a double-dividend outcome and leads to a trade-off between pollution levels and unemployment. In this paper, a simple search and matching model of labour market is developed where workers are characterized by heterogeneous productive abilities in order as to examine the impact of a pollution tax on employment. An attempt is made in order to determine the efficient level of taxation in the short run, dropping the assumption of free-entry (zero profits) of firms. Copyright International Atlantic Economic Society 2013

Keywords: Pollution; Search; Taxes; Unemployment; H21; H23; J64 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s11294-012-9392-x

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