Are pollution permit markets harmful for employment?
AbstractThis 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 35 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/30411
Monopolistic competition; Equilibrium employment; Pollution permit market; Unemployment benefits;
Other versions of this item:
- Nicolas Sanz & Sonia Schwartz, 2011. "Are Pollution Permit Markets Harmful for Employment?," Documents de Travail 2011-04, CEREGMIA, Université des Antilles et de la Guyane.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
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