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Longevity and environmental quality in an OLG model

Pierre-André Jouvet, Pierre Pestieau () and Gregory Ponthiere ()
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Pierre-André Jouvet: EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

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Abstract: Whereas existing OLG models with endogenous longevity neglect the impact of environmental quality on mortality, this paper studies the design of the optimal public policy in a two-period OLG model where longevity is influenced positively by health expenditures, but negatively by pollution due to production. It is shown that if agents, when choosing how much to spend on health, do not internalize the impact of their decision on environmental quality (i.e. the space available for each person), the decentralization of the social optimum requires a tax not only on capital income (to internalize the pollution externality), but, also, on health spending (to internalize the congestion externality). We also examine the second-best policy under a limited set of taxation instruments, and explore its sensitivity to the pollution process and to individual preferences.

Keywords: Longevity; Health care; Natural environment; Pollution (search for similar items in EconPapers)
Date: 2010-07
Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754437
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Published in Journal of Economics, Springer Verlag, 2010, 100 (3), pp.191-216. ⟨10.1007/s00712-010-0142-3⟩

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Journal Article: Longevity and environmental quality in an OLG model (2010) Downloads
Working Paper: Longevity and environmental quality in an OLG model (2010) Downloads
Working Paper: Longevity and environmental quality in an OLG model (2010)
Working Paper: Longevity and environmental quality in an OLG model (2007) Downloads
Working Paper: Longevity and environmental quality in an OLG model (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00754437

DOI: 10.1007/s00712-010-0142-3

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