Are Pollution Permit Markets Harmful for Employment?

Nicolas Sanz and Sonia Schwartz ()

No 2011-04, Documents de Travail from CEREGMIA, Université des Antilles et de la Guyane

Abstract: This paper investigates if pollution permit markets are harmful for employment within a Wage Setting-Price Setting (WS-PS) model. The employment level is determined according to several financing unemployment benefits: a wage tax or the revenue of the pollution permit auction. We first show that a permit market weakens the union market power. Whatever the way that unemployment benefits are financed, the choice of the pollution cap is always neutral on the employment levels, and these latter always increase if the technology to reduce pollution become more efficient. Depending on the value of the wage tax, the employment level can be higher or lower when unemployment benefits are financed by pollution permits rather than a wage tax.

Keywords: monopolistic competition; equilibrium employment; pollution permit market; unemployment benefits (search for similar items in EconPapers)
JEL-codes: E24 J50 L13 Q52 Q58 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2011-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-lab
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http://www2.univ-ag.fr/RePEc/DT/DT2011-04_Sanz_Schwartz.pdf First version, 2011 (application/pdf)
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Related works:
Journal Article: Are pollution permit markets harmful for employment? (2013)
Working Paper: Are pollution permit markets harmful for employment? (2013)
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