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Pollution effects on labor supply and growth

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  • Stefano Bosi
  • David Desmarchelier
  • Lionel Ragot

Abstract

type="main" xml:lang="en"> Recent empirical contributions have observed a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which has focused on the effects of pollution on consumption demand. In this paper we study the short- and long-run effects of pollution in a Ramsey model where pollution and labor supply are non-separable arguments in households’ preferences. We determine sufficient conditions for the existence and uniqueness of a long-term equilibrium and we show how large (negative) effects of pollution on labor supply may promote macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation.

Suggested Citation

  • Stefano Bosi & David Desmarchelier & Lionel Ragot, 2015. "Pollution effects on labor supply and growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 11(4), pages 371-388, December.
    • Handle: RePEc:bla:ijethy:v:11:y:2015:i:4:p:371-388
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    1. Yasuhiro Nakamoto & Akihiko Yanase, 2022. "Pollution externalities and corrective taxes in a dynamic small open economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(3), pages 667-703, June.
    2. Stefano Bosi & David Desmarchelier & Lionel Ragot, 2015. "Preferences and pollution cycles," Working Papers hal-04141382, HAL.
    3. Stefano Bosi & David Desmarchelier, 2017. "Are the Laffer curve and the green paradox mutually exclusive?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(5), pages 937-956, October.
    4. Stefano Bosi & David Desmarchelier, 2018. "Pollution and infectious diseases," International Journal of Economic Theory, The International Society for Economic Theory, vol. 14(4), pages 351-372, December.
    5. Maxime MENUET & Alexandru MINEA & Patrick VILLIEU & Anastasios XEPAPADEAS, 2021. "Growth, Endogenous Environmental Cycles, and Indeterminacy," LEO Working Papers / DR LEO 2889, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    6. Qing Zhao & Chih-Hung Yuan, 2020. "Did Haze Pollution Harm the Quality of Economic Development?—An Empirical Study Based on China’s PM2.5 Concentrations," Sustainability, MDPI, vol. 12(4), pages 1-16, February.
    7. Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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