Inequality, Environmental Protection and Growth

Laura Marsiliani and Thomas Renstrom
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Laura Marsiliani: W. Allen Wallis Institute of Political Economy, University of Rochester
Thomas Renstrom: W. Allen Wallis Institute of Political Economy, University of Rochester and CEPR

No WP35, Wallis Working Papers from University of Rochester - Wallis Institute of Political Economy

Abstract: We analyze how, in representative democracies, income distribution influences the stringency of environmental policy and economic growth. Individuals (who differ in abilities) live for two periods, working when young and owning capital when old. Externalities are caused by a polluting factor. The revenue from pollution taxation, as well as capital-income taxation, is redistributed lump-sum to the old. The fiscal decision, at each point in time, is taken by a majority elected representative. In politico-economic equilibrium, more inequality (in terms of the skewness of the distribution) yields a lower pollution tax, a larger capital tax, and lower growth.

Keywords: Environmental policy; redistribution; inequality; political economy; growth. (search for similar items in EconPapers)
JEL-codes: D62 D72 H21 H23 O41 (search for similar items in EconPapers)
Pages: pages
Date: 2002-11
New Economics Papers: this item is included in nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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