Environmental policy and inequality: A matter of life and death

Karine Constant

No 2017.07, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: This paper analyzes the economic implications of an environmental policy when we take into account the life expectancy of heterogeneous agents. In a framework in which everyone suffers from pollution, but health status depends also on individual human capital, we find that the economy may be stuck in a trap in which inequalities persistently grow, when the initial pollution intensity of production is too high. Moreover, we emphasize that such inequalities are costly in the long run for the economy, in particular 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 overcome this situation. We show that a stricter environmental policy may allow the economy to escape from the inequality trap while it enhances its long-term growth rate, when initial inequalities are not too high.

Keywords: Endogenous growth; Environmental policy; Human capital; Inequality; Longevity (search for similar items in EconPapers)
JEL-codes: I14 O44 Q56 Q58 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2017-05
New Economics Papers: this item is included in nep-ene, nep-env, nep-hea and nep-res
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http://faere.fr/pub/WorkingPapers/Constant_FAERE_WP2017.07.pdf First version, 2017 (application/pdf)

Related works:
Working Paper: Environmental Policy and Inequality: A Matter of Life and Death (2015)
Working Paper: Environmental Policy and Inequality: A Matter of Life and Death (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fae:wpaper:2017.07

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