Are pollution permit markets harmful for employment?

Nicolas Sanz and Sonia Schwartz ()

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Abstract: This paper analyzes the effects of pollution permit markets on equilibrium employment in a wage-setting/ price-setting (WS-PS) model. The employment level is determined according to different methods of financing unemployment benefits: a wage tax or the revenue from a pollution permit auction. We show that a permit market weakens the trade unions' market power. Furthermore, whatever the method of financing unemployment benefits, the choice of the pollution cap is always neutral for employment, and the level of employment always increases as the pollution abatement technology becomes 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 wage tax.

Keywords: Monopolistic competition; Equilibrium employment; Pollution permit market; Unemployment benefits (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

Published in Economic Modelling, 2013, 35, pp.374-383

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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? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00866721

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